Cathie Wood Likes Bitcoin as Both Deflationary and Inflationary Hedge

Wood would choose bitcoin over gold "hands down" as an asset to hold for the next ten years.

AccessTimeIconNov 6, 2023 at 5:07 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

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.

Edited by Stephen Alpher.



Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.

Jamie Crawley

Jamie Crawley is a CoinDesk news reporter based in London.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.