Cathie Wood, CEO of ARK Invest, says US banking challenges will motivate institutions to invest in Bitcoin for portfolio diversification. During an interview with Bloomberg, Wood explained that Bitcoin’s impressive performance during US banking crisis would “attract more institutions”.
“One of the things that happen in a crisis is liquidity dries up so that tends to hurt assets.” She adds, “Bitcoin moved in a very different way from the equity markets, in particular, was quite instructive.”
According to Wood, ARK’s forecast for Bitcoin’s value is still realistic, with a projected price of over $1,000,000 by 2033.
“You’ll find the building blocks of those [Bitcoin] price targets in our ARK Big Ideas 2023. And they are, for the base case, I would suggest quite conservative. We’ve dialed some of them down since last year. I know that corporate treasuries pulled away from Bitcoin because the regulators were pulling them away from Bitcoin on their balance sheets. So we’ve pulled back there. But we do believe that the behavior of the price through this crisis is going to attract more institutions, for example.”
She believes that institutions will follow the same pattern of diversifying their portfolios with Bitcoin as they did with other asset classes in the past few decades.
“We’ve done a report targeting institutional investors and the allocation that they should make if they care about this new asset class, diversifying their portfolios. I believe it’s somewhere between 2.5% and 6.5%. So not crazy. These are the sorts of allocations they would have made to emerging new categories of assets like real estate in the 70s, emerging markets, and small-cap in the 80s and 90s.”
In a recent tweet, she said that once the Federal Reserve “starts addressing the deflationary banking crisis”, a strong economy similar to the “Roaring Twenties” will emerge. It’s possible for innovative technologies such as blockchain to lead the way.
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