Bitcoin (BTC) price prediction: Ark Invest says BTC will hit $2.4 million by 2030

Cathie Wood, the CEO of Ark Invest, is well-known for her bullish price targets for Bitcoin (BTC 0.70%). Earlier this year, she predicted that the price of Bitcoin will reach $1.5 million by 2025. Recently, in an updated prediction, she set an even higher price target of $2.4 million for Bitcoin by 2030.

At today's prices, a $2.4 million future price tag for Bitcoin assumes that the cryptocurrency will soar by 2,426% over the next five years.

Several years ago, Cathie Wood and her team at Ark Invest devised a Bitcoin valuation model that uses a building block approach to break down the key areas driving Bitcoin's price growth and then attempt to forecast how these areas are going to perform over the next five years. The model then sums up the value of each of these key areas to arrive at a total valuation for Bitcoin.

One of the key drivers of Bitcoin price growth involves the new spot Bitcoin ETFs, which large institutional investors are continuing to pour money into.

In the updated $2.4 million forecast, Cathie Wood thinks that Bitcoin could account for 6.5% of investment portfolios by 2030. This is a significant portion of institutional investors' portfolios, especially considering that many risk-averse investors may be comfortable with only a 1% allocation to Bitcoin. However, it is certainly within the realm of possibility, especially as more investors become interested in cryptocurrency and its potential for long-term appreciation.

In Ark Invest's "Big Ideas 2025" report that was published in January, Cathie Wood arrived at a $1.5 million price tag for Bitcoin. If you compare the numbers used in that report with the numbers used in the updated prediction of $2.4 million, not much has changed. For example, Ark Invest is still using the 6.5% allocation figure for institutional investors and the same 10x multiple for Bitcoin's price-to-earnings ratio.

However, one key difference is in how they are calculating Bitcoin's coin supply. In the updated prediction, Ark Invest's analysis indicates that as much as 40% of Bitcoin's supply is now "vaulted," which means that it has been taken off cryptocurrency exchanges and put into private blockchain wallets for safe long-term storage. It also refers to Bitcoin that has been lost or has simply disappeared from circulation.

This missing 40% could have a profound impact on supply and demand. As we know from Economics 101, increased demand for an asset amid declining supply should send the price of that asset soaring higher. Bitcoin, famed for its inherent scarcity, appears to be becoming more scarce over time.

In Ark Invest's updated valuation model, they also used an experimental new metric called "Liveliness," which refers to how much of the outstanding Bitcoin supply can be traded on a daily basis. When this "Liveliness" metric is used as part of the valuation model, it results in a much higher price forecast for Bitcoin. You can check the math yourself -- it's all publicly available on the official Ark Invest website.

You might have noticed that I have not once used the word "tariffs" until now. As soon as I heard about Ark Invest's new $2.4 million price target, I immediately assumed it involved tariffs and global trade policy. But this doesn't appear to be the case -- the updated forecast was based primarily on new thinking about Bitcoin's circulating supply.

That being said, Ark Invest does point out that more investors are starting to view Bitcoin as "digital gold" and that this is now the second-biggest driver of its future valuation. It also points out that Bitcoin is now being viewed as a potential safe haven asset in many emerging markets, where there are concerns about currency devaluation and hyperinflation.

As tariffs go into effect, keep your eye on these two factors because they could dramatically impact Bitcoin's future valuation. After all, in Ark Invest's base-case scenario, Bitcoin only hits a price of $1.2 million. And, in a bear-case scenario, Bitcoin only makes it to $500,000.

For now, I'm focusing on investor inflows into the spot Bitcoin ETFs. If these hold up well amid ongoing tariff uncertainty, and if we start to hear more stories about institutional investors moving their money into Bitcoin, then I'll be much more confident about Bitcoin hitting the $2.4 million price point within the next five years.