• CEO Cathie Wood of Ark Invest believes that many institutional investors have yet to enter the cryptocurrency industry.
• Despite this, she claims that institutional investors are continuing to pour large sums of money into Bitcoin, and that the price of the cryptocurrency will rise by $500,000 if hedge funds and other large investors put just 5% of their money into the commodity.

Cathie Wood, the American investor whose profile has soared in recent months as a result of her investment ideas, has once again predicted a rise in the price of bitcoin.

It is not the first time that Wood has predicted how high the cryptocurrency's value could rise. In September, the CEO of Ark Invest offered a similar bullish outlook on Bitcoin, predicting that its value could eventually rise to $550,000 over the following few years.

In an interview with CNBC on Thursday, she reiterated her prediction, stating that the entry of large amounts of money into the cryptocurrency field will cause BTC to rise by $500,000.

Wood stated that institutions simply need to allocate 5 percent or less of their total investment into Bitcoin in order to see the pioneer cryptocurrency surge another $500,000 in value from its current pricing.

According to her, such an allocation to big portfolios does not have to happen suddenly, but rather gradually over time. She predicts that Bitcoin's price will eventually hit $550k, which would represent a tenfold increase in the cryptocurrency's value.

The elusive "holy grail" of asset allocation

Wood asserted that the cryptocurrency market has consistently drawn large capital inflows from hedge funds and other institutional investors, which is expected to be beneficial to Bitcoin's long-term prospects.

According to her, the cryptocurrency's appeal today stems from investors' need for alternatives to traditional investment vehicles such as equities, bonds, and other such instruments.

According to the investor, cryptocurrency currently falls under the type of asset class that institutions are looking to acquire. Bitcoin and Ethereum are the two most heavily invested in this "new asset class," according to her comments to CNBC.

In an era when investors are looking for new methods to diversify their portfolios, Wood believes the trick is to select investments that are low in connection to their current holdings.

As she pointed out, this is how investment managers accomplish diversification, referring to it as the "holy grail" of asset allocation when it comes to asset allocation.