Cathie Wood, founder of investment manager ARK Invest, said bitcoin (BTC) can serve as a hedge against deflation in addition to its potential in an inflationary environment.
Appearing last week on Merryn Somerset Webb's podcast for Bloomberg, Wood claimed there is no counterparty risk in bitcoin thanks to its decentralization and visibility of all transactions on the network. She contrasted this to the opaque inner workings of the banking system.
"You can only surmise because they're losing deposits and they have to fund those by selling securities," Wood said. "The deposit flight has not stopped and they're forced to raise interest rates to compete against money market funds."
Wood reminded of the regional bank crisis in the U.S. in March when a handful of lenders collapsed, helping to send bitcoin's price higher by nearly 50% to $30,000.
"[Now] you see it pumping up again and you see the regional bank index in the U.S. breaking below where it was in March."
Wood was echoing comments she made in May that the banking crisis along with the collapse of crypto exchange FTX a year ago had "proved the concept" of bitcoin as they exposed the dangers of centralization in financial systems.
BTC's reputation as a potential inflationary protection investment is in step with the crypto's comparisons to digital gold. While Wood acknowledged that actual gold can also work as a hedge against both inflation and deflation, she maintained that bitcoin would be her choice "hands down" if she had to choose an asset to hold for the next 10 years.
"Gold already has its demand, it's happened. Bitcoin is new, institutions are barely involved," she said. "Young people would much prefer to hold bitcoin than to hold gold."
Wood's ARK Invest is a sizable holder of cryptocurrency exchange Coinbase (COIN) stock and the Grayscale Bitcoin Trust (GBTC). The company has also filed paperwork with the U.S. Securities and Exchange Commission for its own spot bitcoin ETF.
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