Cathie Wood and her firm Ark Invest are known for their love of cutting-edge, disruptive technology. As part of their investment strategy, they have targeted innovative assets, and Bitcoin (BTC -1.87%) naturally fits their preference. To shed more light on Bitcoin, Ark releases a monthly "earnings report" on Bitcoin, providing valuable insights into blockchain data and macroeconomic factors that help provide perspective on the world's first cryptocurrency.
Here's what was in the June report and what could be in store for Bitcoin.
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Bitcoin's performance and institutional interest
June proved to be a positive month for Bitcoin, with a nearly 12% increase in its value. This marks the fifth out of six months in 2023 that Bitcoin finished in the green, a welcome change after a challenging 2022.
According to Ark Invest, plans by big institutional money managers to offer spot Bitcoin exchange-traded funds (ETFs) played a significant role in the recent upward momentum. BlackRock, Fidelity, VanEck, Invesco, and even Ark Invest itself have all submitted applications to the Securities and Exchange Commission (SEC) in an attempt to gain approval for the first spot Bitcoin ETF in the U.S.
Ark suggests that added demand from institutions seeking exposure could potentially bring a new wave of momentum to the market as a spot ETF would make it easier for individuals and other investors to hold Bitcoin in retirement accounts and pensions.
Bitcoin's supply pressure and investor confidence
Ark Invest also highlighted the immense pressure already existing on Bitcoin's supply. Most notably, the number of bitcoins that haven't moved in the past year or more has reached nearly 70%, an all-time high. This high holding level suggests investors have great confidence in its future price growth and that any unexpected sell-offs could be quickly absorbed by holders looking to accumulate more Bitcoin.
In addition, the existing supply constraints could be further exacerbated as the next halving remains less than a year out. Sometime in April or May 2024, Bitcoin's supply growth rate will decrease to a mere 1.75%, lowering the pace at which new bitcoins enter the market. When coupled with the potential entrance of large institutional investors, the halving could provide a further boost to Bitcoin's price as it becomes subject to the laws of supply and demand.
Broader economic factors to consider
Ark Invest also reiterated its belief that a recession could be on the horizon, if not already underway. Although Bitcoin is often seen as separate from the overall economy due to its decentralization and independence from specific governments or countries, it remains influenced by the overall economic health.
Ark Invest pointed to a handful of metrics, including the unprecedented speed of interest rate hikes. The rapid pace of these increases -- rates are now more than five percentage points higher than in March 2022 -- raises concerns about potential strains on regional banks and commercial real estate.
Still bullish
Despite the bearish view on the economy, Ark Invest maintains a relatively positive outlook for Bitcoin. The resurgence in its price and renewed institutional interest have helped Bitcoin regain its footing after a challenging 2022.
While Wood is not predicting a new all-time high in the near future, she recently reiterated her belief that Bitcoin could potentially be worth more than $1 million by 2030. With Bitcoin's current price still around $30,000, more than 50% below its previous all-time high, investing today could potentially lead to long-term gains if Wood and her team's predictions come to fruition.
