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(Kitco News) – Inflation has been an urgent topic of conversation over the past two years as multiple global developments, from the COVID-19 pandemic to Russia’s invasion of Ukraine, have sent the prices of everyday items skyrocketing, squeezing the wallets of billions of people.
While inflation has moderated somewhat in recent months, it remains a potent threat to the health of the global economy, and deflation has also become a rising concern as consumers around the world start to penny-pinch and opt out of buying things that are not essential.
For ARK Investment Management CEO Cathie Wood, it doesn’t matter whether inflation or deflation is the problem because the answer is the same – Bitcoin (BTC).
During a recent interview on Bloomberg’s Merryn Talks Money podcast, Wood reiterated her view that she sees an era of falling prices in our future, backed by new technologies including artificial intelligence, electric vehicles, robotics, genomic sequencing, and blockchain, and sees Bitcoin as the best hedge against the unknowns that humanity faces.
When asked whether she would prefer to hold gold, cash, or Bitcoin for 10 years, her answer was clear and without hesitation.
“Bitcoin, hands down,” she said. “Bitcoin is a hedge against both inflation and deflation because there’s no counterparty risk, and institutions are barely involved. It’s digital gold.”
She provided multiple reasons for holding this position, including the banking crisis that flared up in March and remains a major concern just below the surface.
“You can only surmise because [banks are] losing deposits, and they have to fund those by selling securities,” she said. “The deposit flight has not stopped, and they’re forced to raise interest rates to compete against money market funds.”
She noted that Bitcoin’s price rallied during the banking crisis in March, and said this and other concerns continue to put a floor under the BTC price. “Now you see it pumping up again, and you see the regional bank index in the U.S. breaking below where it was in March,” she said.
When asked to explain why she would choose Bitcoin over gold, Wood pointed to the affinity of younger investors for this ‘digital gold’ in an increasingly digital world.
“Gold already has its demand; it’s happened,” she said. “Bitcoin is new; institutions are barely involved. Young people would much prefer to hold Bitcoin than to hold gold.”
Wood has long been one of the most ardent supporters of Bitcoin – previously predicting that Bitcoin would exceed a price point of $1 million in the next decade – and at times was one of the few voices coming from the realm of traditional finance to support the growth of the digital asset sector.
Bitcoin’s price has more than doubled so far in 2023 amid the uptick in geopolitical headwinds and depreciating fiat currencies, reigniting the conversation around Bitcoin serving as a potential hedge against inflation. And with multiple large asset managers, including BlackRock and ARK Invest, looking to launch a spot BTC exchange-traded fund (ETF) within the next three months, the potential inflow of billions of dollars’ worth of institutional money could easily help propel BTC above a price point of $100,000 in relatively short order.
The ARK 21Shares spot BTC ETF application must be ruled on by Jan. 10, 2024, setting the stage for Wood’s firm to become one of the first to offer such an investment vehicle, and cementing her legacy as one of Bitcoin’s biggest supporters in the realm of finance.
Wood also sees artificial intelligence as another force that is shaping the future of humanity, and sees a future where AI will combine with the blockchain to usher in a new era of digitization. That’s “going to enable micro tasks globally and a division of labor in a way we can’t even imagine now,” she said during the podcast.
Rich Dad Poor Dad author Rober Kiyosaki also sees a major shift underway in the investment landscape and continues to promote Bitcoin as part of a diversified protection portfolio to his followers on social media.
“SHIP of FOOLS. Forever and ever financial experts have promoted the idea ‘Smart Investors’ invest in 60/40 60% bonds 40% stocks,” he tweeted last week. “In 2024, 60/40 investors will be [the] biggest losers. Before going down with the ship consider a shift to 75% Gold, Silver, Bitcoin 25% real estate/oil stocks. This mix may allow you to survive the greatest crash in world history. Good luck. Take care.”
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.