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Recent disruptions in the banking industry have demonstrated that Bitcoin (BTC) and Ether (ETH) can endure economic instability, surpassing other asset classes and acting similarly to gold, according to ARK Invest CEO Cathie Wood — although one seasoned investor remains unconvinced.
In an interview on April 15, Wood stated that Bitcoin’s ability to withstand the latest banking crisis has been “the most remarkable” among all the indicators her technology-focused investment firm is observing.
Wood asserted that Bitcoin and Ether are now functioning as “risk-off” assets and as a “flight to safety” for investors in the face of macroeconomic uncertainty:
“They’re going to disrupt the traditional world order. What are Bitcoin and Ether doing? I mean by the very fact that they’re being considered flight to safety like gold, that’s really interesting and suggests much broader-based adoption and acceptance than I think most people understand.”
“We would say that there is a flight to safety, certainly led by crypto assets, and it is telling us that the world is transforming and will continue to transform. You cannot stop innovation,” she continued.
Why have bitcoin and other crypto assets appreciated during this banking crisis? In our view and in contrast to those in the traditional financial world, many crypto assets face no central points of failure: they are decentralized, transparent, and auditable.
— Cathie Wood (@CathieDWood) March 23, 2023
Wood believes that cryptocurrency will eventually become a topic in elections as the sector gains wider acceptance and the public becomes more aware of the regulatory pressures the U.S. government is imposing on the industry to maintain centralized control over money and monetary policy.
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However, not everyone agrees with Wood’s perspective.
Ray Dalio, the founder of Bridgewater Associates, the largest hedge fund globally by assets under management, stated in an interview on April 12 that Bitcoin cannot function as an “effective currency” due to its volatility and the reluctance of central banks to adopt it:
“Bitcoin is neither an effective store hold of wealth or a medium of exchange so it is not an effective currency. It has a volatility to it that has no relation to practically anything […] it’s a very, very poor alternative to gold.”
“They can outlaw [Bitcoin]. They can regulate it. Central banks and countries pretty much don’t want it anyway,” he remarked, adding that it receives attention “way out of proportion” to its size.
Related: Bitcoin likely to outperform all crypto assets following banking crisis, analyst explains
Dalio reinforced his argument by noting that gold ranks as the third largest reserve held by central banks, following the U.S. dollar and euros.
Despite having previously referred to Bitcoin as “one hell of an invention,” Dalio recently expressed a desire to see an “inflation-linked” coin developed to help consumers preserve their purchasing power.
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