Kevin O'Leary Responds To Cathie Wood's Bitcoin Prediction: 'The U.S. Economy Would Have To Collapse'

Cathie Wood, CEO of asset management firm Ark Invest, is known for making outlandish projections about the future of cryptocurrencies. While these predictions would make any investor in the tokens much wealthier, there are some very strong assumptions behind the predictions that have a very low probability of actually occurring. 

Wood has made several predictions about Bitcoin, raising the price target each time. At the start of the year, Wood noted that Ark's "base case" for Bitcoin would be $600,000. However, this prediction was raised to as high as $3.8 million by 2030:

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"Last year we put out our bull case for Bitcoin. It was $1.5 million. With this institutional green light that the SEC has provided, kicking and screaming though it did, the analysis we've done is that if institutional investors were to allocate a little more than 5% of their portfolios to Bitcoin, as we think they will over time, that alone would add $2.3 million to the projection I just gave you," Wood said. 

According to Kevin O'Leary, entrepreneur and host on "Shark Tank," "that kind of appreciation would mean that the American economy collapsed in my view. So that is not a good speculation."

O'Leary goes on to say that many view Bitcoin as a hedge against economic downturns and that he owns a "weighting in it for that reason." This is largely due to the fact that Bitcoin has a predictable supply that allows the price to be controlled almost exclusively by demand, whereas central bank currencies can be manipulated by human interference. 

However, O'Leary does not believe that the world economy or the U.S. economy will collapse soon, which, according to his logic, would make it nearly impossible for Bitcoin to reach Wood's price target.

One caveat to O'Leary's point is that Wood's prediction relies on institutional investment. Wood and Ark believe that high levels of institutional involvement with Bitcoin could send the price higher. While this could happen, the probability of institutions putting "a little more than 5% of their portfolios to Bitcoin" is near zero. 

While either a worldwide economic collapse or a huge level of institutional investment could potentially send Bitcoin to new heights, these events are very unlikely to occur. Additionally, it is important to note that Wood has a vested interest in hyping up Bitcoin and making the future seem very bright. In January 2024, Ark was one of several firms that released a spot Bitcoin ETF. If Wood can get investors excited about Bitcoin through her predictions, she could influence investors to begin trading Bitcoin ETFs, and more specifically, Ark's ETF.

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