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Crypto SWOT: Ark Investment Management's Cathie Wood believes bitcoin has a $500k future

Commentaries & Views

Strengths

  • Of the cryptocurrencies tracked by CoinMarketCap, the best performer for the week was Xenon Pay, gaining over 278,000,000%.

  • Seeking fresh ways to bet on digital assets, Cathie Wood's Ark Investment Management is allowing one of its funds to invest in Canadian Bitcoin ETFs, reports Bloomberg. In a late-Friday filing for the $5.7 billion ARK Next Generation Internet Fund, the firm adjusted its prospectus to include reference to holding exposure to cryptocurrencies. In addition, Wood commented this week at the SALT conference in New York that she believes Bitcoin's price could rise tenfold to top $500,000 in the next five years, reports Bloomberg.

  • Bitcoin has now traded above $10,000 an entire year, reports CoinTelegraph. On September 9, 2020, Bitcoin had slowly edged into the $10k zone and hasn't returned since in over a year. In fact, by the fourth quarter of 2020, Bitcoin was trading at $28,000 – a 180% increase in value. Many cryptocurrency enthusiasts expect Bitcoin to repeat itself again this year with a 180% increase to $135,000 by the start of 2022.

Weaknesses

  • Of the cryptocurrencies tracked by CoinMarketCap, the worst performing for the week was Channels, down 99.74%.

  • According to a central bank official, the Republic of Uzbekistan will never adopt cryptocurrencies like Bitcoin as a payment method, writes CoinTelegraph, alleging that Bitcoin is backed by nothing. Behzod Khamraev, deputy chairman of the Central Bank of Uzbekistan, pointed out that there are about 28 trillion Uzbekistani soms in circulation, and all of those are backed by the central bank's assets. Uzbekistan officially banned its residents from making payments in cryptocurrencies in late 2019.

  • Authorities in the Chinese province of Hebei have reportedly launched a campaign against cryptocurrency mining and trading. According to a quoted announcement by the region's cyberspace administration, several government agencies are working together to prevent the use of the region's computing power in the crypto activities which the government considers illegal, reports Bitcoin.com on Thursday. Government agencies and state-run companies in the province which surrounds Beijing have been asked to inspect their information systems and put an end to any use of their computing power to mint digital coins by the end of September, as stated in the South China Morning Post (SCMP).

Opportunities

  • Coinbase Global Inc. sought to raise $1.5 billion in its first junk-bond offering at the start of the week, reports Bloomberg, a deal that provides another stamp of approval for cryptocurrency and a sign that the nine-year-old firm is gaining mainstream acceptance (even as regulators ramp up scrutiny). The firm saw such high demand it boosted the original deal size to $2 billion. On Thursday, Bloomberg reported that the junk bonds declined, as new bonds fell for the second day since pricing at par on Tuesday.

  • Interactive Brokers Group reported that it launched low-fee cryptocurrency trading on its platform, adding to the growing online retail brokerages to add digital assets to its offerings, reports Yahoo! Finance this past Monday. "As financial markets evolve, sophisticated individual and institutional investors are increasingly seeking out allocations to digital currencies as a means of achieving their financial objectives," said CEO Milan Galik. Interactive Brokers is partnering with Paxos Trust Company to enable the new service.

  • In a private meeting with the U.S. SEC, Fidelity Investments urged the regulatory body to approve its Bitcoin exchange-traded fund (ETF), reports Bloomberg, listing the virtues of an idea that the regulator has been slow to embrace. Filings show that executives from Fidelity laid out reasons why the regulator should approve the product, including increased investor appetite for virtual currencies, the growth of Bitcoin holders and the existence of similar funds in other countries.

Threats

  • Litecoin gave up a 20% gain and tumbled back following a fake press release sent out by GlobeNewswire at the start of the week, referencing a partnership with Walmart, reports CNBC. GlobeNewswire said that a fraudulent user account was used to issue the release, and then a social media coordinator from Litecoin mistakenly tweeted it from the company's official account.

  • Protests in El Salvador happened this Wednesday over the adoption of Bitcoin as legal tender and recent moves by El Salvadorian President Nayib Bukele to consolidate power, reports Bloomberg. Although the demonstrations were largely peaceful, one group of protesters smashed windows and set fire to a Bitcoin ATM kiosk installed last month ahead of the cryptocurrency's rollout as legal tender. Along with Bitcoin's adoption last week, the government has proposed more than 200 changes to the constitution including eliminating a ban on presidential re-election.

  • In a statement spoken at the SALT Conference on Wednesday, billionaire Ray Dalio said regulators will try to 'kill' Bitcoin if it gains mainstream success. In an article by Yahoo! Finance, Hollerith reports that Dalio believes Bitcoin is a "viable asset class" and "interesting" for diversifying a portfolio. However, if Bitcoin becomes too successful, then regulators will likely ban it.
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