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Bitcoin’s banking crisis surge will ‘attract more institutions’: ARK’s Cathie Wood

March 22, 2023 Coin Telegraph

Ark Invest

Cathie Wood was impressed that Bitcoin “moved in a very different way” compared to the equity market in response to the recent banking crisis.

The value proposition of Bitcoin (BTC) is on full display amid the current banking crisis, which will only “attract more institutions” to the BTC market over time, ARK Invest CEO Cathie Wood believes.

Wood shared her thoughts on BTC’s recent price surge in a March 21 Bloomberg interview, stating its price behavior through the crisis “is going to attract more institutions.”

“The fact that Bitcoin moved in a very different way from the equity markets, in particular, was quite instructive,” she added.

ARK Investment Management CEO Cathie Wood says the behavior of the Bitcoin's price through the latest banking turmoil will attract more institutions and investors https://t.co/2d8cT7SX3n pic.twitter.com/Eaymh05lhq
— Bloomberg Crypto (@crypto) March 21, 2023

Institutional interest in Bitcoin may have already arrived according to Oliver Linch, the CEO of Seattle-based crypto exchange Bittrex.

Linch noted in a March 21 interview on The Wolf Of All Streets Podcast that many big banks bought into crypto as an investment product well before the recent banking crisis:

“The big talking point of this bear market is institutional interest in crypto. Every big bank now has a substantive crypto desk, not just for trading, but for partnerships as well.”

However, he noted there’s still a divide between traditional financial institutions and crypto firms which has caused headwinds in institutional adoption over the last few months.

“Historically, those big players have been the biggest drivers of innovation,” he said, before claiming the two sides are currently “stuck in a bit of a rut” and the “big change” won’t happen until they stop fighting for superiority.

“It’s not crypto versus Goldman Sachs or crypto versus institutions. It’s a race to who can do crypto better.”

As for the impact on Bitcoin’s price from the institutional interest, Wood explained in the interview that ARK Invest’s $1-1.5 million BTC price prediction by 2030 was made on the back of an institutional investor BTC allocation analysis, which estimates most firms to allocate between 2.5% to 6.5% to BTC in their investment portfolios.

“These are the sorts of allocations that they would have made to emerging, new categories of assets like real estate in the 70s and small caps in the 80s and 90s,” Wood added.

*ARK Invest estimates the BTC price towards $1.5 million will be pushed by institutional investors allocating between 2.5-6.5% of their portfolio into BTC. Source:* *ARK Invest*

Linch, on the other hand, believes that “aggressive” institutional adoption will come when opportunities become more easily identifiable:

“Show them a way that it can be done and it can make them money and I guarantee you they won’t stand in the way of that. They’ll be pedal to the metal to exploit that opportunity.”

Positive sentiment has surrounded Bitcoin following the collapses of Silvergate Bank, Silicon Valley Bank and Signature Bank. The BTC price has surged 43.6% since its most recent low on March 11, compared to a 25.3% increase in the broader crypto market over that time, according to CoinGecko data.

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‘Wall of worry’ led to digital wallets, blockchain tech ignored: Cathie Wood

January 13, 2023 Coin Telegraph

Market uncertainty calls for an opportunity to take advantage of disruptive innovation which has historically "gained share during turbulent times," says ARK Invest CEO.

ARK Invest CEO Cathie Wood believes that digital wallets and blockchain tech were among “game-changing innovations” that the equity markets largely ignored in 2022.

In a Jan. 12 blog post on the ARK Invest website, Wood suggested that the equity market faced a “wall of worry” in 2022, caused by fears of entrenched inflation and higher interest rates, and largely ignored a number of innovative technologies.

Wood highlighted that digital wallets are “replacing cash and credit cards,” noting that they overtook cash as the top transaction method for offline commerce in 2020.

Further arguing that digital wallets should not be overlooked, she noted that they also accounted for approximately 50% of global online commerce in 2021.

After the most difficult year ever in the equity market for innovation-based strategies, we just sent our clients this letter highlighting the breakthrough technologies that already are transforming the world. In our view, innovation solves problems! https://t.co/YdBiIZhY0D
— Cathie Wood (@CathieDWood) January 13, 2023

Wood suggested that the recent collapse of crypto exchange FTX hasn’t affected the larger mission of what public blockchains were intended for. She noted:

“Public Blockchains like Bitcoin and Ethereum have not skipped a beat in processing transactions.”

Wood highlighted how the FTX collapse educated crypto investors to be more diligent with where they store their crypto assets, saying that the share of trading volume on decentralized exchanges, which allow for trading without a central intermediary, rose 37%, jumping from 8.35% to 11.4%.

Wood said she has never in her “30 years working in portfolio management” experienced such unstable market conditions, saying she has never seen “markets this dislocated.”

The CEO suggested that the economy is facing a challenging situation, with a decrease in money supply, a decline in commodity prices and the “unwinding” of bloated inventories, which indicate a slowdown in inflation, and possibly even deflation.

Wood noted in the report that the fear is high in investors stating that investors are holding “high levels” of cash not seen since the 9/11 crisis in 2001.

Other “game-changing” innovations that Wood believed the equity market “largely ignored” in 2022 included Artificial Intelligence (AI), electric vehicles, space exploration and 3D printing.

She believes despite uncertainty in the market, disruptive innovation technologies which “solve problems,” have historically “gained share during turbulent times.”