Why Cathie Wood Still Believes Bitcoin Beats Traditional Assets for Diversification

TLDR

• Ark Invest CEO Cathie Wood says bitcoin offers portfolio diversification due to low correlation with stocks, bonds, and gold
• Wood maintains a $1.2 million bitcoin price target by 2030, down from earlier $1.5 million forecast
• Bitcoin’s correlation with S&P 500 was 0.28 versus 0.79 for S&P 500 and REITs, according to Ark data
• Morgan Stanley recommends up to 4% bitcoin allocation while Bank of America approved similar wealth advisor guidance
• Jefferies strategist removed 10% bitcoin allocation recommendation, citing quantum computing security concerns

Ark Invest CEO Cathie Wood renewed her support for bitcoin as a portfolio diversification tool in her 2026 market outlook. Wood pointed to the cryptocurrency’s low correlation with traditional asset classes as a key reason institutional investors should consider it.

According to Ark’s data, bitcoin has shown weaker price correlations with stocks, bonds, and gold since 2020 than those assets have with each other. The correlation between bitcoin and the S&P 500 stood at 0.28, compared to 0.79 for the S&P 500 versus real estate investment trusts.

Wood wrote that bitcoin should be a good source of diversification for asset allocators looking for higher returns per unit of risk. She has maintained a bullish stance on the cryptocurrency for years.

The Ark Invest CEO currently forecasts bitcoin reaching $1.2 million by 2030. This represents a downward revision from her previous $1.5 million target, which she adjusted after stablecoins began capturing some of the value initially assigned to bitcoin.

The lower target still implies potential upside of 1,159% from bitcoin’s recent price of $95,300 per coin. Wood’s forecast relies on three primary factors driving future growth.

Institutional Adoption and Store of Value Arguments

Ark predicts institutional investors will allocate around 6.5% of their assets to bitcoin by 2030, equating to approximately $13 trillion. The firm also expects bitcoin to serve as a hedge against currency devaluation in emerging markets.

The digital gold thesis represents another pillar of Ark’s forecast. With global above-ground gold reserves valued at $32 trillion, Ark believes bitcoin could capture 60% of that market, or $19 trillion.

Cathie Wood’s comments align with recent guidance from major financial institutions. Morgan Stanley’s Global Investment Committee recommended opportunistic allocation of up to 4% in bitcoin for portfolios.

Bank of America approved wealth advisors to recommend a similar approach to clients. Brazil’s largest asset manager, Itaú Asset Management, also recommended small bitcoin allocations as a hedge against currency and market shocks.

However, not all Wall Street analysts share Wood’s enthusiasm. Jefferies strategist Christopher Wood removed his 10% bitcoin allocation recommendation on Friday, replacing it with gold instead.

The Jefferies analyst, who added bitcoin to his model portfolio in late 2020 and increased exposure to 10% in 2021, cited concerns about quantum computing. He said advances in the technology could eventually weaken the Bitcoin blockchain’s security.

Recent Performance Raises Questions

Bitcoin ended 2025 with a 6% loss while gold surged 64% for the year. The performance gap raised questions about bitcoin’s status as a store of value during periods of uncertainty.

CF Benchmarks pointed to bitcoin as a portfolio staple, showing conservative allocations could improve efficiency through better returns and diversification. The research suggested even small positions might benefit risk-adjusted portfolio management.

Based on bitcoin’s fully diluted supply of 21 million coins, Wood’s $1.2 million price target would translate to a market capitalization of $25.2 trillion. This valuation would make bitcoin five times more valuable than Nvidia, currently the world’s largest company at $4.5 trillion.

The U.S. economy’s total output was about $31 trillion last year for comparison. Wood’s target represents a substantial increase from bitcoin’s current $1.9 trillion market capitalization, which accounts for more than half of all cryptocurrency value in circulation.

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