What Can You Learn From Cathie Wood’s Crypto Holdings?

Many investors follow Cathie Wood’s ARK Invest funds for ideas about the stocks they should be buying or selling for their portfolios, as ARK funds have a track record of delivering good returns. In addition to stocks, Wood invests in cryptocurrencies. What can you learn from ARK Invest’s cryptocurrency holdings?

Initially ignored by investors and governments, cryptocurrencies have become a major force in the global economy. Ukraine has turned to the crypto community for donations amid Russia's invasion, and in El Salvador, Bitcoin has been adopted as an official currency.

Cathie Wood-led ARK Invest is a family of nine ETFs, with billions of dollars in investments across industries. The funds’ favorite stock investments are Tesla, Teladoc, Coinbase, and Square. ARK Invest also has exposure to crypto (mostly Bitcoin and Ethereum).

Whereas some companies, such as MicroStrategy, Galaxy Digital, Tesla, and Coinbase, have invested in Bitcoin directly, some institutional investors have favored indirect exposure to the crypto, which helps them avoid the challenge of buying and storing it safely. For Bitcoin exposure, ARK has invested in Grayscale Bitcoin Trust (GBTC) through its ARKW fund.

Other major investors in GBTC are Axel Capital Management, Parkwood, and Rothschild Investment. The Bitcoin trust has a minimum capital requirement of $50,000 and charges a 2 percent annual fee. Grayscale has also developed trusts that give exposure to other promising cryptos, such as Solana and Cardano.

For Ethereum exposure, ARK has invested in Grayscale Ethereum Trust (ETHE). The trust requires a minimum investment of $25,000 and charges a 2.5 percent annual management fee. Other top investors in the fund are Rothschild Investment, Parkwood, Emerald Mutual Fund, and Tocqueville Asset Management.

ARK funds have invested in Bitcoin because Wood is bullish on the crypto for a number of reasons. Many people use Bitcoin for payment, and Wood notes that global usage of the crypto is still low considering its potential.

Wood also believes Bitcoin will be worth more as companies convert their balance sheet cash into the crypto, following in the footsteps of Tesla, MicroStrategy, and Jack Dorsey-led Square parent Block. Moreover, the fund manager sees more hedge funds adding Bitcoin to diversify their portfolios. Wood predicts that Bitcoin will be worth $500,000 by 2026 and $1 million by 2030.

The ARK boss is excited about Ethereum, which has grown to be the favorite blockchain for launching DeFi, NFT, Web3, and metaverse apps. Wood expects the DeFi boom to drive huge growth in Ethereum, and sees the crypto benefiting from its shift to the more energy-efficient PoS model from the much-criticized PoW.

By 2030, Wood predicts Ethereum’s market cap will hit $20 trillion and that Ether will be worth $170,000–$180,000. That prediction implies a 4,000 percent upside from Ether’s record high of about $5,000.

While ARK Invest’s crypto holdings are currently concentrated in Bitcoin and Ethereum, its interest in the space is growing and more opportunities are being launched.