Ark Invest mentioned AI, Bitcoin, public chains, electric vehicles, robots, 3D printing, and other fields in its annual report “BIG IDEAS 2024”. The following is a summary of the Bitcoin section.
Chapter 3: Bitcoin Asset Allocation
Bitcoin surpasses all mainstream assets in the “long-term time frame.”
Bitcoin’s correlation with traditional finance remains low.
Optimal allocation of Bitcoin: 19.4%
How can Bitcoin reach $2.3 million?
Chapter 4: Bitcoin in 2023
Bitcoin rose 155% in 2023.
Ark’s reliable indicator: On-chain market mean.
Bitcoin is a safe haven asset.
Four catalysts for Bitcoin in 2024.
Chapter 3: Bitcoin Asset Allocation
This chapter mainly discusses how much capital investors should allocate to Bitcoin under the premise of risk control and maximizing returns.
In addition, Ark also mentioned that if about 19% of global investable assets are invested in Bitcoin, Bitcoin will reach $2.3 million.
Bitcoin surpasses all mainstream assets in the “long-term time frame.”
Ark compared the performance of gold, commodities, real estate, bonds, stocks, emerging markets, and other assets in the past few years and pointed out that Bitcoin’s long-term annualized return surpasses all mainstream assets.
However, it seems unfair to say this to mainstream assets, as they have a long history and their volatility has already become stable. If we look at the past three years, Bitcoin’s average annual growth rate is slightly lower than that of commodities.
Bitcoin’s correlation with traditional finance remains low.
Despite the emergence of Bitcoin futures and spot ETFs, it seems that Bitcoin has not been completely “tamed” by traditional finance.
Ark pointed out that Bitcoin’s correlation with traditional asset classes is low at 0.27, but even lower for gold and commodities.
Asset class correlation
Optimal allocation of Bitcoin: 19.4%
Based on maximizing risk-adjusted returns and setting a 5-year investment period, Ark suggested the following allocation proportions:
Gold: 40.7%
Stocks: 30.2%
Bitcoin: 19.4%
Commodities: 9.6%
How can Bitcoin reach $2.3 million?
Last year, Ark made predictions for different market environments such as bull and bear markets and believed that Bitcoin would reach $258,500 to $1.48 million by 2030.
This year, Ark divided the “global investable assets” of $250 trillion and the allocation proportion to Bitcoin as follows:
1% allocation: Bitcoin will reach $120,000
4.8% allocation: Bitcoin will reach $550,000
19.4% allocation: Bitcoin will reach $2.3 million
Chapter 4: Bitcoin in 2023
Ark recounted how Bitcoin recovered from various negative factors in 2022 and demonstrated its resilience as a hedge asset in 2023. It also mentioned the impact of the introduction of Bitcoin spot ETFs.
Bitcoin rose 155% in 2023.
This chapter starts with the overall trend of Bitcoin in 2023 and highlights major events, from the Silicon Valley Bank crisis at the beginning of the year to the resignation of CZ, the founder of Binance, at the end of the year. Bitcoin’s surge also pushed the total market value of cryptocurrencies to $827 billion.
Ark’s reliable indicator: On-chain market mean
The report pointed out that Ark has always used the on-chain market mean as an original indicator, which has been a reliable boundary for identifying Bitcoin’s rise and fall. From past trends, it can be observed that when the Bitcoin price is higher than the on-chain market mean, it is usually in the early stage of a bull market.
Bitcoin is a safe haven asset
During the banking crisis in the United States in March last year, the KBW Bank Index plummeted while Bitcoin quickly rose, with an increase of over 40% by May, highlighting its role as a risk hedge asset.
Four catalysts for Bitcoin in 2024
Bitcoin halving: The expected inflation rate will decrease from 1.8% to 0.9%.
Institutional adoption: BlackRock CEO Larry Fink has significantly changed his view on Bitcoin.
Bitcoin spot ETF: Further reduces the learning curve and complexity of investing in Bitcoin.
Regulatory developments: Bankruptcies like Celsius and FTX have promoted regulatory developments, including the implementation of the EU MiCA law.
Ark’s annual prediction report has certain reference value, especially considering the founder’s long-term optimism about Bitcoin and the research team’s in-depth research on Bitcoin. The advantages of Bitcoin listed in the report, such as scarcity, security, and globalization, are convincing.
However, some of the predictions and positions in the report should be verified, especially considering that Ark is also an issuer of Bitcoin spot ETFs. Looking back at Ark’s past predictions, they have always been overly optimistic about the extent of Bitcoin’s rise.
Big Ideas 2024
bitcoin
BTC
Ark Invest
Bitcoin
Stocks
Gold
Further reading
Ignoring IMF warnings, Salvadoran Vice President: Bitcoin will remain legal tender for at least five more years.
US Department of Energy requests energy reports from mining companies, citing a 50% increase in Bitcoin prices leading to a mining boom.