Important points
- Cathie Wood predicts that institutional implementation will reduce Bitcoin’s price volatility and limit severe drawdowns.
- Wood expects Bitcoin to outperform gold next year as market dynamics change.
ARK Invest CEO Cathie Wood believes Bitcoin is moving to a stage where institutional adoption can prevent a serious price decline.
In an interview on Mornings with Maria this morning, Wood said Bitcoin’s role as a risk-on asset could disrupt the historic four-year boom-and-bust cycle.
“I think the four-year cycle will break,” Wood said. “Bitcoin regularly fell 75% to 90% in the early days. Volatility is decreasing. It’s down about 30-odd percent.”
The head of ARK pointed out that Bitcoin is functioning as a risk-on asset, although it has played a risk-off role in past crises such as the European debt crisis and the U.S. local banking crisis. He said that while Bitcoin’s four-year cycle pattern is concerning, institutional participation in the asset class will likely prevent further declines.
“We may have seen the lows a few weeks ago,” she says.
Bitcoin has fallen 20% in the past three months, while gold has risen nearly 60% since the beginning of the year. Wood predicts that this trend will likely reverse next year, with gold likely to fall and Bitcoin to rise.
“Gold is now more of a risk-off asset and its rally is evidence that we are overcoming the wall of fear,” she stressed. “Investors are using gold as a hedge against geopolitical risks.”
“If you look at what happened from the early ’80s to the late ’90s, we were in the very golden age of innovation that ended with the internet, so gold went down. We think the same thing could happen now and Bitcoin will continue to be risk-on and re-engage,” she added.
According to CoinGecko, Bitcoin is trading at around $94,000, up 4% in the past 23 hours. The market is awaiting tomorrow’s FOMC decision in anticipation of the final rate cut of the year.
