Renowned money manager Cathie Wood, chief executive of Ark Investment Management, remains one of bitcoin’s biggest evangelists.
“We think bitcoin has just begun” Wood said in an interview on CNBC. Institutions are just starting to catch up to individuals in using bitcoin, she said.
Wood called the world’s biggest digital currency a hedge against inflation. But she didn’t mention that bitcoin has slid 26% during the past year, while inflation has exploded. Consumer prices surged 7.9% in the 12 months through February.
A big issue is who will win in creating the biggest bitcoin wallet, Wood said. Brokerage firm Robinhood Markets (HOOD), financial services firm Block’s (SQ) Cash App and Coinbase (COIN) , the country’s biggest cryptocurrency exchange, all are in the running, she said.
“The first go-to for institutions is Coinbase,” Wood said. “It has the most robust platform, the most liquidity.”
Coinbase is the fifth largest holding in Ark’s flagship Ark Innovation ETF (ARKK), Block is No. 6 and Robinhood is No. 19.
PATRICK T. FALLON/AFP via Getty Images
Bitcoin to $1 Million
Wood is sticking to her January prediction that bitcoin will crack $1 million by 2030. It has a host of use cases, including as an insurance policy for people of means so that their wealth can’t be confiscated, Wood said.
Meanwhile, she recently expressed opposition to much more in the way of interest-rate increases from the Federal Reserve.
Her thoughts came in a web presentation and tweet.
“Yesterday [April 1], the yield curve — as measured by the difference between the 10-year Treasury and 2-year Treasury yields — inverted, suggesting that the Fed is going to raise interest rates as growth and/or inflation surprise on the low side of expectations … which will be a mistake,” she tweeted.
Inversion means two-year Treasury yields exceed 10-year yields, which is the opposite of normal. Investors usually expect higher income when they invest for longer periods.
Some experts say yield-curve inversion indicates that recession is on the way, though the lag time isn’t clear. The yield curve has gone back to normal over the past few days. The two-year yield recently stood at 2.50%, compared with 2.71% for the 10-year yield.
‘Playing with Fire’
While many investors and economists expect the Fed to lift interest rates by 0.5 percentage point at its meeting next month, the ramifications of the inverted yield curve will help keep the central bank move at 0.25 point, Wood said in the web presentation.
“The great fear is that we’re in a replay of the 1970s, a time of double-digit inflation and interest rates,” Wood said. “We don’t think that’s the case. The bond market is sending signals that you can’t do this.”
To be sure, “the Fed may want to play it tough, but I think the bond market will give them an even more severe warning that they’re playing with fire,” she said.
