Last update:
February 7, 2024 3:40 pm EST | 2 minutes read
Source: Bloomberg
Cathie Wood, CEO of Ark Invest, believes that Bitcoin (BTC) is starting to replace gold on the investing stage as the precious metal loses popularity over time.
In a video presentation published by Ark on Sunday, Wood showed that commodities as a whole have failed to provide reliable protection against inflation over a period of several decades.
“Today we are where we were in the early 80s,” said Wood, referring to the Bloomberg Commodity Index. “That’s not adjusted for inflation – you can only imagine how low those commodity prices would be.”
Bitcoin vs. Gold: A Historical Look
In January 1981, gold was trading at $555 an ounce, meaning it outperformed other commodities over the next few decades. Its growth has been relatively limited since reaching $1800 in 2011, but 13 years later it is trading at $2030.
During this time, Bitcoin (BTC) rose from $1 in 2011 to $43,000 today, outperforming gold in almost all periods. Wood noted that Bitcoin is often referred to as digital gold due to its decentralized nature and limited supply.
“Bitcoin shot up 40% as the KRE – the regional banking index – imploded,” Wood noted, referring to the U.S. banking crisis in March 2023 that involved many cryptocurrency-adjacent banks. Gold also rose at that time, but not to the same extent.
Bitcoin's reaction to ETFs
Although Bitcoin experienced a brief decline alongside gold following the launch of several US spot ETFs last month, the asset's price has since returned to pre-launch levels. Gold itself got off to a slow start when its first ETF launched in 2004, before beginning an eight-year uptrend from $400 to $1,800.
Cathie Wood explains why #Bitcoin is going to $1 million 🔥
“The more uncertainty and volatility there is in global economies, the more our confidence in #Bitcoin increases. It’s a hedge against inflation.” pic.twitter.com/vwLIpQHNSZ
– Vivek ✓️ (@Vivek4real_) January 29, 2024
According to Wood, Bitcoin only declined after the ETFs were introduced because it was a “sell-the-news event” – when speculators buy an asset before an expected positive event and then take profits after it actually occurs.
Approximately 15 million BTC of the 19.5 million BTC in circulation are still in “strong hands” – meaning they have not moved on the blockchain in 155 days.
“This idea that [Bitcoin] “Is a flight to safety or a flight to quality prevails here again,” said Wood. “Substitution with Bitcoin is now occurring and we believe this will continue as there is a much simpler and less frictionless way to access Bitcoin.”
Ark Invest was one of nine asset managers to launch a new Bitcoin spot ETF on January 11th.
The ARK 21Shares Bitcoin ETF (ARKB) experienced its first-ever day with no net inflows on Monday, but absorbed another $8.6 million on Tuesday. To date, it holds $717 million worth of BTC.
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