Bitcoin represents a new asset class and may serve as a reserve currency in the future. This was announced by ARK Invest founder and CEO Katie Wood on Thursday during an online conference hosted by Bloomberg.
According to her, the biggest surprise for ARK Invest last year was the fact that although the firm expected an influx of large investors into the cryptocurrency market, its management was not yet going to follow their example. Now everything is completely different.
Wood drew investors’ attention to the traditional 60/40 portfolio of stocks and bonds. And here she suggested that this once magic formula will soon come to an end. Here is her line in which she draws attention to what is happening in the industry.
What will happen to Bitcoin in the future
The cue is from Decrypt.
Take a look at what is happening with bonds now. If we end up with 40 years of constant interest rate cuts, this asset class is over. What’s next? We think cryptocurrency may be the solution to the financial challenges ahead.
According to the expert, cryptocurrencies are able to correct the shortcomings of the existing system. Recall that a huge number of advantages will help them in this. First of all, the coins on the blockchain are in most cases decentralized, that is, they do not depend on any authority, but work at the expense of the network participants. Also, in the case of Bitcoin, the maximum amount of cryptocurrency is predetermined – this figure will not exceed 21 million coins.
In addition to this, blockchain assets eliminate the need to interact with intermediaries who charge interest for this. Therefore, sending amounts – and especially large ones – to anywhere in the world is often more profitable in a crypt.
Here is a transcript of a conversation with Katie. We recommend that you watch if you understand English by ear.
Here are ARK Invest CEO Cathie Wood’s expectations for Bitcoin
Wood spoke at today’s @crypto Summit
– Bloomberg TV (@BloombergTV) February 25, 2021
While the head of ARK Invest has no doubts that the traditional diversification strategy makes sense from a cash safety standpoint, she is concerned about the quantitative easing path of the US Federal Reserve and its overall monetary policy. Here is a quote.
The fixed income has done forty years of very hard work. If Bitcoin is a new asset class, why not switch to it?
Wood emphasized that large corporations like Tesla or Mass Mutual investing part of their capital in BTC are direct evidence of the growing adoption of the main digital asset around the world. She continues.
They use Bitcoin as a defense against what can go wrong. Cash should be the best risk-free asset, but in this situation, we have Bitcoin that can do this even better.
Recall that Tesla invested $ 1.5 billion in BTC in January, as it said this month. At the same time, an insurance company from Massachusetts called MassMutual acquired BTC for $ 100 million – this became known in the first half of December 2020. Through this, the company wants to achieve «an impact on the growing economic dimension of our digital world.»
However, negative news is indispensable. Bitcoin’s volatility – that is, its sudden price changes – makes it a poor tool for making payments. The idea was voiced yesterday by Mastercard Executive Vice Chair Ann Kearns at the Future of Money conference. Here is a quote from the event.
Bitcoin does not behave like a payment instrument. It is too volatile and transactions take too long.
In addition, Kearns noted that using BTC in everyday life is unlikely to work – and illustrated this with a strange example.
So if you and I go for coffee, and I decide to pay in BTC, then our drinks may cost, I don’t know, 40 percent more expensive by the time they are made. In addition, it takes 10 minutes for a full transfer of funds.
Naturally, talking about 40% changes in the exchange rate is too much. After all, this has happened only a few times in the history of Bitcoin, and for such falls, really good reasons were needed. For example, concerns about the spread of the coronavirus that swept the world in March 2020.
We believe that Katie Wood’s arguments reflect new trends within the finance industry. Thanks to the large investments of popular companies, the reputation of cryptocurrencies has really improved, and more and more people have begun to look at Bitcoin. Therefore, the likelihood of a massive transition to blockchain coins really exists – and it will grow as their rates increase.