Bitcoin and Ether are proving to be resilient assets that can withstand economic turmoil and outperform other asset classes, according to Cathie Wood, CEO of ARK Invest. In an interview on April 15, Wood stated that Bitcoin’s resilience during the recent banking crisis has been the most remarkable of all indicators her tech-focused investment management firm is monitoring. She believes that Bitcoin and Ether are now acting as “risk-off” assets and as a “flight to safety” for investors amid macroeconomic uncertainty. Wood thinks cryptocurrency will eventually become an “election issue” when the sector becomes more broadly accepted and the public can more clearly see the kinds of regulatory pressures that the United States government is applying on the industry to maintain centralized control of money and monetary policy.
Wood’s views are not shared by all investors. Ray Dalio, the founder of Bridgewater Associates, the world’s largest hedge fund by assets under management, explained in an interview on April 12 that Bitcoin cannot serve as an “effective currency” because it is too volatile and central banks won’t adopt it. He believes that Bitcoin is neither an effective store hold of wealth nor a medium of exchange and has a volatility that has no relation to practically anything. In contrast, gold is the third-largest reserve held by central banks, trailing only the U.S. dollar and euros. Despite previously describing Bitcoin as “one hell of an invention,” Dalio recently explained that he instead wants to see an “inflation-linked” coin be built that would serve to ensure consumers secure their buying power.
Wood believes that Bitcoin and Ether are disrupting the traditional world order and are being considered a flight to safety like gold. She suggests that this indicates much broader-based adoption and acceptance than most people understand. Wood’s view is supported by the fact that many crypto assets face no central points of failure, are decentralized, transparent, and auditable. This is in contrast to the traditional financial world, where central points of failure are common.
Wood’s comments come at a time when cryptocurrency is gaining more mainstream acceptance. With the recent surge in Bitcoin prices, many institutional investors are taking notice of the asset class. The recent IPO of Coinbase, a major cryptocurrency exchange, is also a sign of the growing acceptance of cryptocurrency. However, regulatory pressures remain a concern for the industry, with many governments seeking to maintain control over money and monetary policy. The future of cryptocurrency remains uncertain, but it is clear that it is disrupting the traditional financial world order.
In conclusion, while Ray Dalio believes that Bitcoin cannot serve as an effective currency due to its volatility, Cathie Wood sees it as a resilient asset that can withstand economic turmoil and function as a flight to safety for investors. Wood believes that cryptocurrency will become an election issue when the sector becomes more broadly accepted and the public can more clearly see the regulatory pressures that governments are applying to maintain centralized control of money and monetary policy. Despite the regulatory pressures, cryptocurrency is gaining more mainstream acceptance, and its disruptive potential is becoming increasingly clear.