The recent banking crisis has shown that Bitcoin (BTC) and Ether (ETH) can withstand a shaky economy, outperform other asset classes, and function like gold, says ARK Invest chief executive Cathie Wood. In an interview, she stated that Bitcoin’s resilience throughout the most recent banking crisis has been “the most remarkable” of all indicators her tech-focused investment management firm is monitoring.
Wood believes that Bitcoin and Ether are now acting as “risk-off” assets and a “flight to safety” for investors amid macroeconomic uncertainty. She claimed that they are going to disrupt the traditional world order and that the fact they’re being considered flight to safety like gold indicates broader-based adoption and acceptance than most people understand. She believes that cryptocurrency will eventually become an “election issue” when the sector becomes more broadly accepted and the public can more clearly see the kinds of regulatory pressures that the United States government is applying on the industry to maintain centralized control of money and monetary policy.
Not everyone shares Wood’s sentiment. Ray Dalio, the founder of Bridgewater Associates, the world’s largest hedge fund by assets under management, said in an interview that Bitcoin could not serve as an “effective currency” because it is too volatile and central banks won’t adopt it. He emphasized that “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.” He added that they can outlaw Bitcoin, regulate it, and that central banks and countries don’t want it anyway. He said it receives attention “way out of proportion” to its size. To support his argument, Dalio pointed out that gold is the third-largest reserve held by central banks, trailing only the US dollar and euros.
Despite previously describing Bitcoin as “one hell of an invention,” Dalio recently explained that he instead wants to see an “inflation-linked” coin built that would serve to ensure consumers secure their buying power. However, Wood strongly disagreed with Dalio’s take on cryptocurrency, telling Yahoo Finance that his argument misses the point of what Bitcoin and other cryptocurrencies are all about. The reason Bitcoin is so popular, according to Wood, is that it is a hedge against government control of the monetary system.
Many other analysts and investors share Wood’s bullish view of cryptocurrency. Blockchain and crypto-focused venture capitalist Tim Draper, for instance, told CNBC in an interview that Bitcoin will move past its current volatility to soar to $250,000 per unit by 2023. While some investors are looking at Bitcoin primarily as a speculative investment, Draper believes that the digital currency will eventually become the world’s primary currency due to its utility and the issues with traditional fiat currencies.
Bitcoin’s value proposition is rooted in its decentralized nature, which effectively allows anyone to participate in a permissionless, peer-to-peer financial system. Since Bitcoin was first created in 2009, it has undergone numerous transformations and has even spurned the creation of thousands of other cryptocurrencies. While some people still view Bitcoin with skepticism, there is a growing group of investors, entrepreneurs, and developers who see its promise as a blockchain-based currency of the future.
Overall, Bitcoin and Ether’s resilience in the recent banking crisis has bolstered the confidence of many investors and analysts. As more people become aware of the flaws with traditional currencies, the demand for cryptocurrencies like Bitcoin and Ether is only likely to grow. The possibilities for cryptocurrency are endless, and many people remain optimistic about the future of this new, decentralized financial system.
