Will Bitcoin hit one million dollars？What about Ethereum？A summary of Ark Invest 2022 report

[TL;DR]

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Bitcoin can hit one million dollars by 2030 because:

• Bitcoin’s market is maturing
• Bitcoin’s Taproot update and wrapped assets improve its usability
• Bitcoin is getting a lot of crypto institutional investments
• El Salvador declared Bitcoin as legal tender

Ethereum’s market cap can exceed 20 trillion dollars in ten years because:

• ETH hit new highs due to rise in DeFi and NFT markets
• DeFi is growing faster than traditional finance
• Ethereum is still a work in progress, with the Ethereum 2.0 network potentially five years away


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There are countless predictions about what the cryptocurrency market and Bitcoin may look like in the future; adoption, technology and of course, pricing. Although anyone can make their own predictions, some guesses are far more educated than others and present a greater weight to investors. One of those guesses is through investment management firm Ark Invest.

Founded by venture capitalist Cathie Wood in 2014, Ark Invest has built a number of services, ETFs and portfolios around technology and innovation. In the past few years, both Cathie and Ark have been very open spokespersons for the rise of blockchain technology and cryptocurrencies.

Recently, Ark Invest released its report “Big Ideas 2022,” with details on what’s to come of the financial markets and technologies over the next few years. In this article, we have a look at Ark’s most recent report and summarize its views on the cryptocurrency market in a digestible manner.

Will Bitcoin hit one million dollars?

According to Cathie Wood’s Ark Invest, it’s very likely that Bitcoin will hit 1 million dollars by 2030. Ark uses that rationale by combining a few points of the report’s research:

Bitcoin Market Maturing

Through this analysis, Ark utilizes Bitcoin’s maturing models to determine where the price will lead in the next few years. Maturing models determine investors’ sentiment towards holding a particular asset in the long term. According to the firm’s data analysis, investors are still extremely optimistic about Bitcoin’s value even after the cryptocurrency reached record-level prices in 2021.

Although Bitcoin reached the 1 trillion dollar market cap last year, a massive milestone for any company, let alone a single digital asset, investors continued to purchase and accumulate the crypto frenetically. Long-term holder supplies have increased consistently since 2013 despite bear and bull markets, and the same occurred for addresses that accumulate Bitcoin by sending amounts to their wallets and not taking it out for circulation.

Bitcoin updates and technological scalability

Last year was a massive landmark for Bitcoin tech. For starters, it introduced the Taproot upgrade, which allows for Bitcoin to improve the speed, safety and efficiency of the network. The first Bitcoin update since 2017, it developed merged signatures to verify transactions.

Also, channels utilizing Bitcoin’s Lightning Network tripled in 2021 - from around 30 thousand to 100 thousand active channels, supporting more than 3500 BTC at once.

Lastly on the technological side, the rise of wrapped Bitcoin also introduced new functionalities to the asset beyond being a store of value. Wrapped Bitcoin are versions of the BTC asset that can be used in other networks; for instance, WBTC is used in Ethereum while sBTC is used in Solana. With the introduction of DeFi to the masses, it open Wrapped BTCs to more opportunities regarding decentralized financial services such as staking, landing, instant swapping and more.

Bitcoin is getting Institutional investment into crypto

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This is certainly the most important point of the report: massive institutional inflows in 2020 and 2021 provided Bitcoin with the credibility needed to truly become a mainstream asset. Crypto ETFs, ETPs, public companies investing, private companies investing, Tesla, MicroStrategy - all these factors took the media by the storm over the past couple of years resulting in an investment inflow of 89.9 billion dollars as of 2021. On top of it is Grayscale’s Bitcoin ETP, the largest holder in the world, with 654 thousand BTCs.

El Salvador declaring Bitcoin as legal tender

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In September of last year, El Salvador made history by becoming the first country to adopt Bitcoin as legal tender - officially recognising it as the nation’s official currency and store of value.

According to Ark Invest, such a decision was not only groundbreaking but it greatly benefited the country. Since then, several crypto wallets were created, investment inflows skyrocketed and El Salvador also innovated once again by creating a facility that mines Bitcoin using volcanic energy.
Ethereum’s market cap can exceed 20 trillion in 10 years


Another massive prediction that Ark Invest makes through its Big Ideas 2022 report is regarding Ethereum: according to the tech investment firm, the second-largest cryptocurrency by market cap in the world can actually hit 20 trillion dollars in total value by 2032. Ark Invest rationalizes the forecast through the following main arguments.

ETH hits new highs due to rise of DeFi and NFTs markets

This section was inevitable: 2020 and 2021 saw the unforeseen growth of use in Decentralized Finance and non-fungible tokens - most of each are powered and traded by Ethereum’s blockchain. Every time an Ethereum-based DeFi project or NFT project grows in popularity across the crypto ecosystem, Ethereum benefited greatly from its user base and transactions.

As a consequence, the ETH crypto hit new highs in 2021, breaking the 4k dollars barrier.

DeFi is growing faster than traditional finance


Ark Invest’s data shows that Decentralized Applications are beating traditional finance in almost every vertical of the financial services ecosystems. Banking? Compound Finance exceeds Bank of America by almost four-fold the amount of last twelve month (LTM) revenue. Exchange? UniSwap, one of many many DEX projects in Ethereum, absolutely stomped the New York Stock Exchange in LTM revenue. The list goes on, but one thing is very clear: Decentralized Finance is no longer alternative finance: it is mainstream and here to stay.

Ethereum is still a work in progress

That is the main argument not only for Ethereum’s forecasted growth, but also most of ETH enthusiasts when speaking about the potential of the project: even with the immense growth and innovation that Ethereum already faced, it is still a work in progress with a lot to improve and many more innovations to come. Vitalik Buterin, Ethereum’s co-founder and main spokersperson, recently mentioned that Ethereum’s 2.0 update could be as far as five years away from completion. While that may steer some people away from optimism towards the network, Ark argues that the opposite should occur: it shows that Ethereum is just getting started.



Author: Gate.io Researcher: Victor Bastos
* This article represents only the views of the researcher and does not constitute any investment suggestions.
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