NEW YORK: Fund manager Cathie Wood says she would unambiguously wager on bitcoin – rather than gold or cash – to safeguard against the possibility of deflation in the coming decade.
The head of ARK Investment Management reiterated her view that she expects an era of falling prices, backed by new technologies including artificial intelligence, electric vehicles, robotics, genomic sequencing and blockchain – an opinion she has held since 2021 even as markets have focused on a new era of heightened inflation risks.
In response to a question on Bloomberg’s Merryn Talks Money podcast about which of the three asset classes she would choose to hold for 10 years, Wood said: “Bitcoin, hands down. Bitcoin is a hedge against both inflation and deflation because there’s no counterparty risk, and institutions are barely involved.” It’s “digital gold,” she said.
Wood has been among the most optimistic voices on the cryptocurrency as she expects it to benefit from the wider growth in new technologies and innovations. She’s previously predicted that the price of bitcoin would exceed US$1mil in the next decade. It’s currently US$35,000, roughly half its 2021 peak.
But after crashing 64% in 2022, bitcoin’s value has more than doubled this year as market participants touted it as a potential inflation hedge, despite its failure to act as one during the biggest consumer-price surge since the early 1980s. More recently, the token has rallied on bets that the US Securities and Exchange Commission may soon approve exchange-traded funds that invest directly in the coin.
Wood is among those in prime position to benefit from ETF approvals. Her firm has applied for a bitcoin ETF alongside 21Shares and invested in the Grayscale Bitcoin Trust (GBTC).
Wood’s US$1.2bil ARK Next Generation Internet ETF snapped up GBTC last November, when the discount was around 40%.
The trust is the largest holding in the fund and has returned about 224% this year through last Wednesday. That compares with a roughly 114% rally for bitcoin. ARK sold some of its GBTC holdings last month.
On the podcast, Wood said she also expects a convergence between AI and bitcoin. That’s “going to enable micro tasks globally and a division of labour in a way we can’t even imagine now.” – Bloomberg
