Cathie Wood, ARK Invest CEO, has been vocal about her belief in Bitcoin’s potential to overshadow gold as the preferred safe-haven asset.
Wood’s insights, shared during a YouTube update, highlighted Bitcoin’s performance during last year’s regional bank crisis in March, where it saw a remarkable 40% price increase, contrasting with the struggles faced by the regional bank index.
The trend, she noted, is resurfacing as Bitcoin gains momentum while the regional bank index faces volatility. Her observations align with a growing sentiment that Bitcoin is increasingly viewed as a ‘flight to quality’ asset.
The recent dip in Bitcoin’s price following the introduction of 11 exchange-traded funds (ETFs) was attributed by Wood to a cycle of anticipatory buying and subsequent selling, a common pattern in financial markets.
Despite this, Wood presented data showing Bitcoin’s price trend against gold, illustrating a strong, long-term uptrend. She believes this signals Bitcoin’s gradual move towards becoming a significant part of the investment landscape, potentially replacing gold for some investors.
Wood’s analysis extends beyond Bitcoin’s price dynamics, touching on broader market movements. She noted the shift of investors from gold to Bitcoin, facilitated by the launch of spot Bitcoin ETFs, which offer a more accessible route to investing in Bitcoin. Wood’s comparison of Bitcoin to gold, emphasizing its role as a “risk off asset” during banking sector instability, further cements her stance on Bitcoin’s evolving role in financial markets.
Bitcoin’s future as an asset
The market’s response to the spot Bitcoin ETF launch, while initially leading to a price correction, has not dampened the long-term outlook for Bitcoin. Wood pointed out that a significant portion of Bitcoin remains in “strong hands,” indicating a long-term investment horizon among many Bitcoin holders.
Previously, Wood’s discussion on a podcast in November 2023 with Merryn Somerset Webb had revealed her conviction in Bitcoin’s potential as a deflation hedge over the next decade. Wood was asked about her choice between Bitcoin, gold, or cash for a 10-year investment hold. She emphasized her belief in Bitcoin as “digital gold,” citing its lack of counterparty risk and its rising popularity among institutional investors.
Meanwhile, analysts examine Bitcoin’s relationship with traditional investment assets, noting its increased correlation with gold in 2023. The observation, highlighted in a Fidelity analysis, contrasts with Bitcoin’s previous trend of moving inversely to interest rates.
Furthermore, the one-year rolling correlation between Bitcoin and gold reaching a record high of 0.8, as reported by Longtermtrends, and suggests Bitcoin is solidifying its position as a reliable component of investment portfolios amid global rate hikes.