Ark's Cathie Wood: Bitcoin Spot ETFs Reduce Friction Costs, Slowly Replacing Gold

ARK Invest CEO Cathie Wood pointed out on the official Ark Invest YouTube channel that after the launch of Bitcoin spot ETF, Bitcoin is gradually replacing the position of gold.

Big Ideas 2024 | The optimal allocation for Bitcoin is 19.4%, with a potential target price of $2.3 million

Bitcoin Proves Its Position as a Hedge Asset

Despite the fact that Bitcoin's performance surged after the US banking crisis last year, which has been cited by many analysts as a classic case of "Bitcoin's hedging ability," Cathie Wood once again emphasized this point.

She pointed out that when the US KBW Bank Index plummeted, Bitcoin quickly rose, climbing over 40% as of May last year, solidifying its role as a risk-hedging asset.

Bitcoin ETF Launch Leads to Decline, Shift from Paper Hands to Diamond Hands

Cathie Wood believes that the launch of Bitcoin ETF represents the public's pursuit of high-quality, secure assets.

Regarding the decline after the launch of the Bitcoin ETF, she pointed out that it was due to many opportunistic investors speculatively buying Bitcoin, leading to a "Sell the news" phenomenon, but she emphasized:

If you continue to pay attention, you will understand that out of the circulating 19.5 million Bitcoins, about 15 million are held long-term by what we call diamond hands, who have not transferred Bitcoin for over 155 days.

Bitcoin Emerges as an Alternative to Gold

Cathie Wood concluded by citing the Bitcoin to Gold Ratio, indicating that Bitcoin has consistently outperformed gold and has indeed become an alternative to gold. She stated:

We believe that the outperformance of Bitcoin over gold will continue because there is a simpler, less friction way to access Bitcoin through spot ETFs. We also mentioned in Big Ideas 2024 that the participation of institutional investors will have an impact on Bitcoin prices.

The gold ratio divides the price of Bitcoin by the price of gold, representing the amount of gold needed to purchase a single Bitcoin. When this ratio rises, Bitcoin outperforms gold, and vice versa. The current ratio of 20.7 is only second to the historic high of Bitcoin in 2021.