On Wall Street, optimism is something of the norm. Even though historical data tells us that not every stock is going to increase in value over the long run, there's a wide disparity among analysts between positive and negative ratings. Whereas 56% of all analyst ratings are the equivalent of "buy" on S&P 500 companies, according to Barron's, just 6% of all ratings fell on the sell side of the equation for S&P 500 companies, as of February.
These ratings, while not always accurate, typically offer investors a baseline of how institutional investors and analysts view their company and/or America's most-influential businesses.
But every so often, an issued price target by an analyst or financial pundit is so far above and beyond the current price of a security that it'll stop investors in their tracks.
Image source: Getty Images.
A little over five weeks ago, one of Wall Street's most famous money managers issued a report that, in the most bullish case scenario, called for the world's most preeminent cryptocurrency to soar by nearly 2,200% come 2030. While this report was littered with a half-dozen reasons to expect this "digital gold" to skyrocket over the next five years, I believe it's far likelier this digital currency will lose half (or more) of its value rather than tack on another 2,200%.
Ark Invest's Cathie Wood goes full bull on Bitcoin
Following the five-week COVID-19 crash in 2020, Ark Invest's CEO and Chief Investment Officer Cathie Wood made a name for herself on Wall Street. Wood's penchant for buying highly innovative companies and game-changing cryptocurrencies led to eye-popping returns in 2020 for Ark's flagship fund, the Ark Innovation ETF.
While some of Wood's prognostications have been lofty, perhaps nothing tops her firm's recently updated forecast for the world's leading cryptocurrency, Bitcoin(CRYPTO: BTC).
Previously, Wood had forecast a bull-case scenario of $1.5 million per token by 2027. But due to various factors, she now believes Bitcoin can ascend to $2.4 million in five years, which would represent upside of almost 2,200% as of this writing in the late evening of May 29, 2025.
Ark Invest's extensive report lists six variables that, under the right circumstances, can send Bitcoin to the moon:
An increase in institutional investment, which will be facilitated through spot Bitcoin exchange-traded funds (ETFs).
Bitcoin being nimbler than physical gold makes it a more easily transferable and convenient store of value.
Investors in emerging markets will seek out Bitcoin as a way to protect their money against the effects of inflation and currency devaluation.
More foreign nations purchase or hold Bitcoin via a strategic reserve.
Additional public companies choose to use their cash to purchase and hold Bitcoin as their asset reserves.
Demand for Bitcoin-driven, on-chain financial services grows and begins to replace legacy financial services.
While there's no denying that Bitcoin has proved skeptics wrong for more than a decade, there are counterarguments to be made to Wood's bullish thesis that make her $2.4 million price target by 2030 seem outlandish.
Image source: Getty Images.
Bitcoin to $50,000 is more likely than $2.4 million by 2030
For example, one of the leading reasons to buy Bitcoin is that it's a perceived hedge against inflation. With U.S. money supply growing on an almost constant basis for more than 150 years and Bitcoin's token supply capped at 21 million, it's viewed as a naturally scarcer asset.
But this isn't entirely accurate. While it might be easier to transfer Bitcoin digitally between users than it is to exchange physical gold, the latter is a tangibly limited resource. Though we haven't mined all the gold in existence, we can't create more gold than currently exists on planet Earth. The same can't be said for Bitcoin, which is limited solely by lines of computer code and developer consensus. While it's unlikely that consensus will be reached to increase the supply of Bitcoin, the probability of it happening isn't 0%. Therefore, Bitcoin's scarcity is a false perception.
I believe Cathie Wood is also incorrect in her assumption that emerging markets will seek out the world's leading digital currency to protect against inflation and currency devaluation.
In September 2021, El Salvador became the first country to officially adopt Bitcoin as legal tender. The government purchased Bitcoin, as well as encouraged citizens to utilize this digital gold to pay for everyday items. Less than four years later, the country's real-world Bitcoin experiment has failed. Few of its citizens adopted the currency for practical use, and the inherent volatility in Bitcoin ran the risk of compromising El Salvador's financial stability.
To build on this point, Bitcoin's first-mover competitive advantages are now effectively gone. While it's still the largest (by market value) and most well-known digital currency, Bitcoin's network is nowhere close to the fastest or the cheapest. A number of other popular blockchain projects can accomplish the on-chain financial services Wood speaks of far more efficiently than Bitcoin.
Bitcoin Price data by YCharts. The above chart doesn't go back further than June 13, 2014.
Lastly, it's important to recognize the role investor sentiment and historical cycles play in an asset class that's not driven by much in the way of traditional fundamentals. Despite Bitcoin leaving the benchmark S&P 500 in the dust on a total return basis, cryptocurrencies are also known for their steep and long-winded bear markets.
Over the last 15 years, Bitcoin has endured around a half-dozen declines of 50% or greater. This includes losing 99% of its value in June 2011, an 83% swoon following the Mt. Gox scandal in April 2013, an 84% tumble during the 2017 to 2018 crypto winter, and the loss of 75% of its value between November 2021 and December 2022. It can take years to recoup these emotion-driven moves lower in crypto's digital gold.
History suggests it's far more likely Bitcoin will shed more than half of its value and head to $50,000 (or considerably lower) than it is that Cathie Wood's moonshot price target will prove accurate come 2030.
Should you invest $1,000 in Bitcoin right now?
Before you buy stock in Bitcoin, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Bitcoin wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider whenNetflixmade this list on December 17, 2004... if you invested $1,000 at the time of our recommendation,you’d have $638,985!* Or when Nvidiamade this list on April 15, 2005... if you invested $1,000 at the time of our recommendation,you’d have $853,108!*
Now, it’s worth notingStock Advisor’s total average return is978% — a market-crushing outperformance compared to171%for the S&P 500. Don’t miss out on the latest top 10 list, available when you joinStock Advisor.
Sean Williams has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
