Key Takeaways
- Cathie Wood predicts institutional adoption will reduce Bitcoin’s price volatility and limit severe drawdowns.
- Wood expects Bitcoin to outperform gold in the coming year as market dynamics shift.
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ARK Invest CEO Cathie Wood believes Bitcoin is transitioning into a phase where institutional adoption may prevent severe price declines.
Speaking in an interview with ‘Mornings with Maria’ this morning, Wood said that Bitcoin’s role as a risk-on asset could disrupt its historical four-year cycle of boom and bust.
“We think the four-year cycle is going to be disrupted,” Wood said. “Bitcoin regularly dropped 75% to 90% in its early days. The volatility is going down. It’s down about 30-some-odd percent.”
The ARK head noted that Bitcoin is behaving as a risk-on asset, though it has played a risk-off role during past crises, including the European sovereign debt crisis and the US regional bank crisis. She said there is fear around Bitcoin’s four-year cycle pattern, but institutional participation in the asset class is likely to prevent deeper declines.
“We may have seen the low a couple of weeks ago,” she said.
Bitcoin has dropped 20% over the past three months, whereas gold has climbed close to 60% year-to-date. Wood predicts this trend could flip next year, with gold likely to retreat and Bitcoin poised for gains.
“Now, gold is more of a risk-off asset, and its rise is proof that we are climbing a wall of worry,” she emphasized. “Investors are using gold as a hedge against geopolitical risk.”
“If you look at what happened from the early 80s to the late 90s, gold went down as we were in really the golden age of innovation, ending with the Internet. We think the same could happen now, and that Bitcoin will remain a risk-on and re-engage,” she added.
Bitcoin is trading at around $94,000, up 4% in the last 23 hours, according to CoinGecko. The market is awaiting tomorrow’s FOMC decision in anticipation of this year’s final rate cut.