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Bitcoin and other cryptocurrencies could potentially be part of the recommended portfolio for daily investors, Cathie Wood of Ark Invest said on Monday.
Wood, whose star as an investor rose significantly last year thanks to the strong performance of her flagship ETF Ark Innovation, told CNBC’s “Closing Bell” that she believes volatile cryptocurrencies will end. by look like bonds.
“We think it will become a new, more accepted asset class … We think it will behave, in fact, I would say more like the bond markets, believe it or not,” Wood said.
Bitcoin has seen a spectacular run to new highs after trading less than $ 10,000 per coin as recently as September. Assets rose to nearly $ 58,000 on February 21, according to Coin Metrics, before calming down slightly. It was trading at around $ 51,700 on Monday.
Although often referred to as ‘digital gold’, bitcoin does not trade in tandem with precious metals, and its high level of volatility is more reminiscent of assets considered to be of higher risk. Wood said that, at the moment, the price of bitcoin is the most correlated with real estate prices.
Nonetheless, Wood said she believes bitcoin could stabilize over time and be part of the recommended portfolio for the average investor, which is 60% in stocks and 40% in fixed income, especially account. given the high price of bonds compared to history.
“If you think about bonds at that level, this idea of a 60-40 balanced portfolio is a bit of a problem,” Wood said. “We’ve been through a 40-year bond bull market. We wouldn’t be surprised to see this new asset class fall into those percentages. Maybe 60 stocks, 20, 20,” Wood said.
Tesla, which has long been one of Ark’s biggest positions, converted some of its cash on its balance sheet to bitcoin earlier this year. Other companies have also increasingly embraced cryptocurrency, either by supporting payments and transfers or by actually buying the assets.
The flagship Ark fund fell in the first months of 2021, with value rotation affecting some of Wood’s largest holdings. The investor said on Monday that she was still confident in her strategy and in Tesla despite the recent losses.
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