Institutional demand to drive bitcoin market cap to $16 trillion by 2030: Ark Invest

Bitcoin BTC$78,303.40, the largest cryptocurrency, is set to surge in the next four years, propelling its market capitalization to $16 trillion by 2030, Ark Invest said in its annual research report, Big Ideas.

The more than 10-fold growth — market cap is currently about $1.5 trillion — will be driven by accelerated institutional adoption and crypto's evolution into an asset class that features in investment portfolios worldwide, the Cathie Wood-led investment company said. That's a compound annual rate of roughly 63%.

Bitcoin's increased popularity will help drive the broader digital asset market to around $28 trillion by the end of the decade, according to the report. It's currently about $2.7 trillion, according to CoinDesk data. It also means the price could surge: Even if all 21 million BTC were in circulation by then, which they wouldn't be, one bitcoin would be valued at more than $730,000.

Wood has long been bullish on bitcoin. In January, Ark Invest forecast a price range of $300,000-$1.5 million by 2030. In February, Wood reiterated its appeal as a hedge against inflation and deflation, driven by technological acceleration.

"Bitcoin is maturing as the leader of a new institutional asset class,” the report said, buoyed by adoption across exchange-traded funds (EFTs), corporate treasuries and sovereign entities.

Institutional ownership of, primarily, bitcoin is already rising quickly. U.S. ETFs and public companies held about 12% of the total bitcoin supply at the end of last year, an increase from about 9% a year earlier, the report said.

The move reflects a shift in how bitcoin is perceived. Once seen primarily as a speculative asset, it is increasingly being considered “digital gold,” a macro hedge and a reserve asset alongside traditional stores of value.

It adds that even a modest penetration into institutional holdings, as low as 2.5% of an estimated $200 trillion global portfolio excluding gold, could contribute about $5 trillion to bitcoin’s total valuation.

The report also predicts that bitcoin will capture an estimated 40% of gold’s total market value, which it estimated at just over $24 trillion currently, implying nearly $10 trillion in additional upside from the “digital gold” narrative alone.

Other contributions to bitcoin’s growth would come from emerging demand for a neutral reserve asset, where even just a 0.5% penetration of a lower $68 trillion monetary base could add about $339 billion in value, along with allocations from nation-states and corporate treasuries that could each contribute hundred of billions of dollars more.