• 1
  • Comment
  • Favorite

Bitcoin may replace bonds, Cathie Wood says

Dow Jones2021-03-04

MW UPDATE: Bitcoin may replace bonds, Cathie Wood says

Andrea Riquier

'Fixed income has done 40 years of really hard work...If Bitcoin represents a new asset class, why not invest in it?'

Bitcoin should be considered a new asset class, one that may even serve as a reserve currency in the future, ARK Invest's Cathie Wood said Thursday.

"You think about the traditional 60/40 stock-bond portfolio, but look what's happening to bonds right now. If we are ending a 40-year secular decline in interest rates, that asset class has done its thing. What's next? We think crypto could be the solution," said Wood, who's the founder and CEO of a family of exchange-traded funds based on disruptive technologies .

As Wood spoke at a virtual conference sponsored by Bloomberg, bonds continued to sell off and other central banks have pledged to support global economies by buying bonds for as long as it's needed, a policy which has helped Bitcoin gain in value.

"We know there's a concern given all the quantitative easing and the no-rules based monetary policy out there. Fixed income has done 40 years of really hard work," Wood said. "If Bitcoin represents a new asset class, why not invest in it?"

Wood clarified that she still thinks we're in a deflationary environment, not an inflationary one. That's because "technologically enabled innovation and creative destruction" brings prices down.

Read next: Coronavirus was the perfect storm for tech innovation, and this fund manager made out

Still, there are indications investors are searching for an additional asset class, including the performance of gold, Wood pointed out.

"The dollar dropping 7% on a trade-weighed basis last year and falling further this year is another stimulus. It should be a stimulus for gold, but Bitcoin is getting the incremental flows that might go to gold."

In the year to date, the gold price is down a little more than 6%, while Bitcoin has skyrocketed 75%.

Wood pointed to institutions investing in Bitcoin as an example of its becoming more mainstream.

Companies like Tesla Inc . and MassMutual are "using Bitcoin as a hedge against what could go wrong. Cash is supposed to be the ultimate risk-off asset of choice and here we have Bitcoin serving that," she said.

While some crypto critics say Bitcoin has no use cases, Wood disagrees. "It represents insurance against unhinged monetary policy and outright wealth segregation in some countries," she said.

All of that adds up to trillions of dollars of market cap potential, up from about $900-950 billion now, she said.

-Andrea Riquier; 415-439-6400; AskNewswires@dowjones.com

 

$(END)$ Dow Jones Newswires

March 04, 2021 08:51 ET (13:51 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Report

Comment

empty
No comments yet
 
 
 
 

Most Discussed

 
 
 
 
 

7x24

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Company: TTMF Limited. Tech supported by Xiangshang Yixin.

Email:uservice@ttm.financial