Ark Invest CEO Cathie Wood suggests that Bitcoin is increasingly serving as a valuable means to evade the effects of high inflation in nations with less stable currencies.
Cathie Wood’s Bitcoin Thesis
The CEO of Ark Invest, known for its bullish stance on AI and blockchain, contends that the recent surge in Bitcoin’s value is fueled in part by less-discussed factors such as currency devaluations in various countries.
During a CNBC interview, Cathie Wood pointed out that currencies like the Nigerian naira have depreciated by as much as fifty to sixty percent over the past nine months. She also highlighted recent devaluations in Egypt and ongoing devaluations in Argentina, suggesting that these events are contributing to what she sees as a flight to safety.
Despite Bitcoin’s price skyrocketing by 50% year-to-date, reaching a new all-time high above $73,000 last month, Wood’s perspective on the rally differs from that of many analysts. While some credit the successful launch of Bitcoin spot ETFs in January, which are more accessible to Wall Street investors, Wood emphasizes Bitcoin’s role as an inflation hedge asset.
This perspective contrasts with the predominant narrative within the U.S., where Bitcoin is often hailed as a hedge against inflation. BlackRock CEO Larry Fink, whose firm is behind a leading Bitcoin ETF, has previously likened Bitcoin to “digital gold,” suggesting that its previous rallies were driven by a flight to quality.
Why Ark Likes Bitcoin
Wood reiterated this perspective, referring to the banking crisis in March 2023 as a pivotal event that propelled Bitcoin’s price by 40%. During this crisis, the government intervened to bail out depositors of Silicon Valley Bank, further underlining Bitcoin’s appeal as a hedge against traditional banking risks.
Ark Invest’s own Bitcoin ETF, ARKB, currently holds approximately $3 billion worth of Bitcoin for clients. However, this week, the fund experienced its first two days of net outflows since its launch.
Wood emphasized that Bitcoin lacks counterparty risk, positioning it as both a risk-on and risk-off asset.
Ark initially invested in Bitcoin when its price was at $250, motivated by events such as Greece’s potential exit from the European Union in the mid-2010s amid its debt crisis. Wood sees Bitcoin as an insurance policy against unstable regimes and poor fiscal and monetary policies.
However, CNBC anchor Andrew Sorkin expressed skepticism earlier this week, doubting whether citizens of countries facing inflation actively seek out Bitcoin as a solution. He dismissed the idea as “fairy dust” used by proponents to fuel speculation around the asset.
