Cathie Wood, head of ARK Invest, expressed a bullish outlook on Bitcoin, indicating the current four-year cycle retracement is the shallowest in its history, suggesting the cryptocurrency is poised for a fresh rally. During her appearance on CNBC, Wood elaborated on ARK Invest's approach to Bitcoin exposure, focusing mainly on direct holdings through its spot Bitcoin exchange-traded fund (ETF), ARKB, rather than indirect exposure via equities such as Strategy (NASDAQ:MSTR). Wood cited both structural reasons and a preference for unfiltered, "pure play" exposure to Bitcoin itself as driving this strategy.
Addressing the recent market volatility surrounding Bitcoin, the episode on October 10th involving a software glitch at Binance was highlighted. This malfunction triggered an automatic deleveraging cascade in futures markets, estimated to have caused around $28 billion in forced liquidations, which imposed lingering downward pressure. Despite those events, ARK believes the deleveraging phase is nearly complete, with Bitcoin approaching the conclusion of its current dip.
While a potential retest of Bitcoin prices in the $80,000–$90,000 range remains possible, ARK anticipates foundational support levels to maintain strength. Wood articulated that this current cycle's trough is the mildest retreat on record for Bitcoin, laying groundwork for new upward momentum.
Wood described Bitcoin as embodying three distinct, transformative revolutions in one asset: a globally rules-based monetary system, a pioneering technological breakthrough, and the dominant representative of an emerging asset class. Despite Bitcoin often being likened to "digital gold," ARK's analysis shows that gold and Bitcoin have had minimal correlation when monitored over a complete market cycle.
Responding to doubts regarding Bitcoin's role as a safe-haven investment, ARK pointed out that since the 2022 equity bear market, Bitcoin has substantially outperformed gold, behaving predominantly like a risk-on asset throughout the market recovery phase. This performance underscores Bitcoin's distinct market dynamics relative to traditional safe-haven assets.
With the introduction of spot Bitcoin ETFs, institutional participants continue to assess Bitcoin's behavior and its underlying four-year cycle patterns. This cautious approach has tempered the pace of significant institutional inflows to date.
From ARK's viewpoint, Bitcoin can evolve to serve dual roles over time—as both a risk-on and risk-off asset. It can hedge against inflation through its fixed supply characteristic while simultaneously offering a defense against deflationary pressures and financial crises due to its decentralized architecture and lack of counterparty risk.
Concerning the broader investment landscape, ARK expects the conventional asset management sector to adapt and integrate with the growing decentralized finance ecosystem. The firm maintains a preference for direct Bitcoin exposure, viewing leveraged or indirect instruments as less favorable for capturing Bitcoin's true value.