Cathie Wood calls bitcoin 'good source of diversification' for investors seeking higher returns

Core Viewpoint - Bitcoin is increasingly viewed as a valuable diversification tool for institutional portfolios, according to Ark Invest CEO Cathie Wood, who emphasizes its low correlation with other major asset classes [1][2]. Group 1: Bitcoin's Correlation with Other Assets - Since 2020, Bitcoin has demonstrated weaker price correlations with stocks, bonds, and gold compared to those assets with each other, making it a more attractive option for asset allocators [2]. - Bitcoin's correlation with the S&P 500 is reported at 0.28, while the correlation between the S&P 500 and real estate investment trusts is significantly higher at 0.79, indicating Bitcoin's relative advantage in diversification [2]. Group 2: Institutional Perspectives - Large institutional investors may consider Bitcoin as more than just a speculative asset, with Wood projecting a price target of approximately $1.5 million for Bitcoin by 2030 [3]. - In contrast, Jefferies strategist Christopher Wood recently reversed his recommendation for a 10% allocation to Bitcoin, opting instead for gold due to concerns over quantum computing potentially undermining Bitcoin's blockchain security [4]. Group 3: Broader Institutional Trends - Other financial institutions are aligning with Ark Invest's perspective, with Morgan Stanley's Global Investment Committee suggesting an "opportunistic" allocation of up to 4% in Bitcoin, and Bank of America allowing wealth advisors to recommend similar strategies [5]. - CF Benchmarks highlighted Bitcoin as a portfolio staple, suggesting that a conservative allocation could enhance efficiency through improved returns and diversification [6].