ARK Invest CEO Cathie Wood thinks thatBitcoin (CRYPTO: BTC) could be today’s “gold standard” and increase purchasing power.
What Happened: Wood’s recent comments were a part of her response to Elon Musk’s question about the current ratio of the S&P market cap to GDP.
Wood responded a few days later, saying she had a hypothesis about why this may be the case.
“In the late 1800s and early 1900s – as telephone, electricity, and the automobile were emerging – the US equity market cap relative to GDP appears to have been 2-3 times higher than it is today,” she said.
ARK Invest founder noted that these technology-enabled platforms are deflationary, thanks to learning curves, or Wrights Law, and the gold standard was in effect during this era.
“As deflation pressured an increasingly difficult-to-measure nominal GDP (the denominator), exponential unit growth and rapid productivity gains increased the quality of earnings while low-interest rates boosted their capitalization (the numerator),” explained Wood.
“The technologically-enabled innovation evolving today dwarfs that of the late 1800s/early 1900s: genomic sequencing, robotics, energy storage, artificial intelligence, and blockchain technology. Moreover, Bitcoin could be today’s “gold standard,” increasing purchasing power!”
Why It Matters:Wood is a known advocate of Bitcoin, and at the helm of ARK Invest, her bullish stance on the cryptocurrency is apparent.
ARK is the largestholderof shares of theGrayscale Bitcoin Trust(OTCMKTS: GBTC), with over 8.5 million shares held.
On a recentpodcastbreaking down ARK Invest’s Bid Ideas Report, Wood commented on Bitcoin’s market cap crossing a trillion-dollar milestone.
“One trillion dollars is just half of what Apple is worth, and yet this is a global digital monetary ecosystem, and Bitcoin is the reserve currency of that ecosystem, and that is a very big idea,” she said.
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