ARK Invest’s report highlights that investors with a long-term perspective have been the biggest beneficiaries of BTC’s growth despite its “notorious” short-term volatility.
In its latest annual research report titled ‘Big Ideas 2024’, ARK Invest, a renowned investment management firm, made a compelling case for including Bitcoin in institutional portfolios. Based on a thorough analysis of the cryptocurrency’s performance, the report recommends a significant allocation of “19.4%” to Bitcoin.
This figure is not arbitrary, but is supported by a thorough evaluation of Bitcoin’s historical performance compared to major traditional investment assets.
ARK Invest Dive into Bitcoin’s Long-Term Success and Value
Over seven years, Bitcoin has demonstrated an annualized return of 44%, clearly outperforming other major assets, which averaged just 5.7%, according to the investment management firm.
ARK Invest’s report delves deeper into the nuances of Bitcoin’s investment potential, highlighting its performance since its inception. This includes a closer look at its trajectory over the past three years, marked by significant technological advances and greater widespread acceptance.
The report highlights that investors with a long-term perspective have been the biggest beneficiaries of BTC’s growth despite its “notorious” short-term volatility. According to ARK, the critical question for investors should not be the timing of their BTC investment but the duration for which they hold it.
Historical data collected by Ark reveals that a holding period of at least five years has always generated profits, regardless of the time of purchase. The investment management firm noted:
Instead of “when,” the better question is “for how long?” Historically, investors who bought and held bitcoin for at least five years made profits, no matter when they made their purchases.
ARK’s report also goes beyond mere investment recommendations. Hypothesizes the potential impact of institutional investments in BTC globally, considering the $250 trillion in global investable assets.
The implications of this group’s modest investment in BTC are quite intriguing. For example, according to Ark Invest, if just 1% of these global assets were allocated to BTC, its price could skyrocket to $120,000.
Going a step further, if institutions were to align with ARK’s suggested allocation of 19.4%, BTC valuation could reach approximately $2.3 million per BTC. This substantial allocation recommendation reflects a significant change from previous years.
ARK analysis further indicates that the “optimal Bitcoin allocation” has increased since 2015. Initially, an allocation of just 0.5% was considered ideal for maximizing risk-adjusted returns over a five-year horizon. This figure has progressively increased, reaching an average of 4.8% over time and peaking at 19.4% in 2023 alone.
Bitcoin Price Remains Supported
Bitcoin price formed a base above the $42,000 level and began a steady rise. BTC was able to break through the $42,200 and $42,500 resistance levels.
There was a move above the 50% Fibonacci retracement level of the descending wave from the high of $43,740 to the low of $41,888. The bulls were able to push the price above the $43,000 resistance. A short-term ascending channel is now forming with support near $42,950 on the hourly chart of the BTC/USD pair.
Bitcoin is now trading above $42,800 and the 100 hourly simple moving average. The immediate resistance is near the $43,300 level. It is near the 76.4% Fibonacci retracement level of the descending wave from the high of $43,740 to the low of $41,888.
The next key resistance could be $43,750, above which the price could start a decent rise. The next stop for the bulls may be the $44,000 level.
By Audy Castaneda
