Cathie Wood said that Bitcoin can outperform in both inflationary and deflationary environments and praised its performance during this year’s banking crisis.
In her latest interview, Ark Invest‘s Cathie Wood stated that Bitcoin serves not only as an inflation hedge but also as a deflationary hedge. During an appearance on Merryn Somerset Webb’s Bloomberg podcast last week, Wood argued that Bitcoin is devoid of counterparty risk due to its decentralized nature and the transparency of all network transactions. She drew a sharp contrast between this and the opaque intricacies of the banking system.
“You can only surmise because they’re losing deposits and they have to fund those by selling securities. The deposit flight has not stopped and they’re forced to raise interest rates to compete against money market funds.”
Wood pointed to the regional bank crisis in the US that occurred in March, during which several lenders collapsed. This crisis contributed to Bitcoin’s price surging by almost 50% to $30,000. She noted:
“Now you see it pumping up again, and you see the regional bank index in the US breaking below where it was in March.”
Wood reemphasized her previous comments from May when she highlighted that the banking crisis, along with the collapse of the crypto exchange FTX a year ago, had effectively demonstrated the concept of Bitcoin. These events exposed the risks of centralization in financial systems.
Bitcoin’s reputation as a potential hedge against inflation aligns with its comparisons to digital gold. While Wood acknowledged that physical gold can also serve as a hedge against both inflation and deflation, she firmly asserted that if she had to choose an asset to hold for the next 10 years, Bitcoin would be her unequivocal choice.
“Gold already has its demand, Bitcoin is new, institutions are barely involved,” she said. “Young people would much prefer to hold bitcoin than to hold gold.”
Ark Invest Buys Block Inc’s Shares
On Monday, Ark Invest acquired shares of Block through its flagship ARK Innovation ETF (ARKK), as well as the ARK Next Generation Internet ETF (ARKW) and the Ark Fintech Innovation ETF (ARKF). This transaction involved the purchase of 113,326 shares, with a total value of $5.61 million based on Block’s closing price of $49.52 on that day.
Ark Invest’s decision to invest in Block shares is consistent with Cathie Wood’s investment philosophy, which frequently centers on innovative companies with strong growth potential. Notably, this move comes after Ark’s recent divestitures of substantial positions in cryptocurrency-related assets.
Conversely, as part of their investment strategy, Ark Invest sold $3.76 million worth of shares in the Grayscale Bitcoin Trust ETF (GBTC) through ARKW. On the same day, GBTC closed at $26.95. It’s worth mentioning that in late October, Wood had divested $2.5 million worth of GBTC shares, despite expressing confidence in Grayscale’s commitment to cold storage solutions.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.