Investors Flock to Bitcoin as Gold Loses Its Shine

ARK Invest CEO Cathie Wood Claims Gold is Being Replaced by Bitcoin as Spot BTC ETFs Make Investing in Bitcoin More Accessible

Cathie Wood says the switch from gold to Bitcoin is happening.

Investors are shifting their attention from gold to Bitcoin (BTC) following the launch of spot Bitcoin exchange-traded funds (ETFs), according to Cathie Wood, the CEO of ARK Invest. In a candid conversation with chief futurist Brett Winton on the firm’s YouTube channel, Wood explained how Bitcoin’s rise and the availability of easier access to the cryptocurrency have caused a substitution effect.

The Rise of Bitcoin: A Gold-like Asset

Wood draws parallels between Bitcoin and gold, highlighting that both assets have the potential to act as “risk off assets” during times of banking sector weakness. She points to a specific occurrence in March 2023 when a regional bank crisis hit the United States, causing Bitcoin’s price to surge by 40%. Wood believes that Bitcoin, like gold, provides individuals with a sense of security and a flight to safety during economic uncertainty.

Wood refers to this period as proof that Bitcoin’s role as a store of value is here to stay. She reflects on the recent increase in Bitcoin’s correlation with gold, reversing its previously inverse relationship with interest rates. Currently, the one-year rolling correlation between Bitcoin and gold stands at an all-time high of 0.80, suggesting their similarities as alternative assets.

Reflecting on the Spot Bitcoin ETF Launch

When discussing the recent debut of spot Bitcoin ETFs, Wood admits that the subsequent price correction did not surprise her. Following the initial launch, Bitcoin experienced a 20% decline, falling from $48,500 to $38,740 within hours. Wood had predicted the occurrence of a “sell on the news” event prior to the launch.

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However, she also highlights a significant statistic: of the 19.5 million Bitcoin in circulation, only 15 million have moved in the last 155 days. This observation suggests that a substantial proportion of Bitcoin holders are taking a long-term view, firmly grasping their assets in “strong hands.”

ARK Invest’s Involvement in the Bitcoin Market

Aside from her insights on Bitcoin’s shift in popularity, Wood’s firm, ARK Invest, has actively participated in the cryptocurrency market. As one of the 10 ETF issuers that launched a spot Bitcoin ETF on January 11, they introduced the ARK 21Shares Bitcoin ETF. Currently, this ETF holds $705.8 million in Bitcoin, making it one of the largest Bitcoin holdings after Grayscale’s GBTC, BlackRock’s IBIT, and Fidelity’s FBTC products.

Furthermore, ARK Invest has been heavily investing in cryptocurrency exchange Coinbase stock (COIN) since February 2022. As of now, they hold 7.187 million shares of COIN, valued at $843 million. However, they have been actively reducing their COIN holdings since June 7, when they possessed 11.43 million shares.

Q&A Section:

Q: Can Bitcoin completely replace gold as a store of value?

A: While Bitcoin is gaining momentum as a store of value, completely replacing gold is unlikely in the near term. Gold has a long history and is deeply ingrained in the financial system. However, Bitcoin’s digital nature and limited supply make it an attractive alternative. It’s more about diversification and offering investors different options to protect their wealth.

Q: How does the launch of spot Bitcoin ETFs benefit investors?

A: The launch of spot Bitcoin ETFs provides investors with a more convenient way to access Bitcoin. Previously, investing in Bitcoin required technical know-how and the use of digital wallets. ETFs simplify the process by allowing investors to gain exposure to Bitcoin through traditional brokerage accounts. This ease of access opens up the world of cryptocurrencies to a broader range of investors.

Q: Is investing in Bitcoin still risky?

A: Investing in any asset carries risks, and Bitcoin is no exception. Its price volatility and uncertain regulatory environment make it a speculative investment. However, as more institutional players and major companies adopt Bitcoin, the market is becoming more established. It’s essential for investors to conduct thorough research, diversify their portfolio, and only invest what they can afford to lose.

Future Outlook and Investment Recommendations:

With Bitcoin gaining more attention as a viable alternative to gold, the future looks promising for the world’s leading cryptocurrency. As global uncertainty persists and economies undergo economic challenges, Bitcoin’s appeal as a safe-haven asset will likely continue to grow.

Investors should consider incorporating Bitcoin into their portfolios as a means of diversification and hedging against traditional financial instruments. Additionally, staying informed about regulatory developments and industry trends is crucial for making well-informed investment decisions.

Given the continuous institutional adoption and increasing acceptance of cryptocurrencies, investors can reasonably anticipate greater opportunities for growth in the cryptocurrency market.

References:

1. “Bitcoin (BTC) Price Pumps Towards $45,000 as Reporter Claims SEC to Approve Multiple BTC ETF Applications – News Expected Soon (Tomorrow)” – CyberMagazines

2. “Crypto Investment Products Saw $22B in Total Inflows in 2023: CoinShares” – Awesome Linking

3. “Gold on Steroids: Bitcoin-Gold Correlation Surges in 2023: Fidelity” – Awesome Linking

4. “5,100 and Up Next: The Major Ethereum Targets According to This Model” – Blocking.net

5. “Arthur Hayes Predicts Bitcoin Price to Experience Massive Correction in Early March” – CyberMagazines

6. “Cathie Wood’s ARK Invest Sells Entire GBTC Holdings, Allocates $100 Million to Bitcoin Futures ETF (BITO)” – CyberMagazines

7. “Valley of Prosperity: The Kid-Friendly Story of Bitcoin Money” – CyberMagazines

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