Bitcoin and other cryptocurrencies could become part of the package recommended for everyday investors, Cathie Wood told Ark Invest on Monday.
Wood, whose star rose as a major investor last year thanks to the strong performance of its leading Ark Innovation ETF, told CNBC’s “Closing Bell” that she believes volatile cryptocurrencies will look like bonds in the end.
“We’re thinking about how it will become a new, better-accepted asset class … We think it’s going to behave, in fact, I’d say more like the established income markets , believe it or not, “Wood said.
Bitcoin has made a remarkable run to new highs after trading below $ 10,000 per coin as of September. The asset rose to nearly $ 58,000 on Feb. 21, according to Coin Metrics, before cooling slightly. It was trading at around $ 51,700 on Monday.
Although often referred to as “digital gold,” bitcoin does not trade in conjunction with precious metals and its high volatility rate is more like an asset that is considered a higher risk. Wood said that, at this point, the price of bitcoin was mostly tied to real estate prices.
However, Wood said she believes bitcoin could stabilize over time and become part of the proposed portfolio for the average investor, which is 60% in stocks and 40% in revenue. fixed entry, especially since the high price of bonds compared to history.
“If you think about bonds from this level, this idea of a 60-40 balanced package is a bit of a problem,” Wood said. “We’ve been through a 40-year bull market in bonds. It would not be surprising for us to see this new asset class as part of these percentages. Maybe 60 equals, 20, 20, “Wood said.
Tesla, which has long been one of Ark’s biggest holders, converted part of its balancing currency to bitcoin earlier this year. Other companies have also embraced cryptocurrency, either by supporting payments and transfers or actually buying the assets.
Ark’s main asset has fallen in the opening months of 2021, with the change in value hurting some of Wood’s biggest holdings. The investor said Monday that it remains confident in its strategy and in Tesla despite recent losses.