Cathie Wood forecasts ongoing gold-to-Bitcoin shift via Spot ETFs

Investors have begun to shift their assets from gold to Bitcoin (BTC) following the launch of spot Bitcoin exchange-traded funds (ETFs), according to Cathie Wood, the CEO of ARK Invest. This trend is expected to continue as Bitcoin becomes more accessible through these ETFs, making it a viable alternative to gold.

Bitcoin is on the rise compared to gold

Cathie Wood, in a recent conversation with Brett Winton, the chief futurist at ARK Invest, discussed the growing interest in Bitcoin as an investment option relative to gold. Wood highlighted that Bitcoin has been outperforming gold, and the availability of spot Bitcoin ETFs has facilitated this shift.

She noted that similar to gold, Bitcoin is seen as a “risk-off asset” when the banking sector shows signs of weakness. In March 2023, during a regional bank crisis in the United States, Bitcoin’s price surged by 40%, demonstrating its potential as a haven asset.

Wood emphasized, “This idea that it’s a flight to quality or a flight to safety is reasserting itself here.”

Bitcoin’s correlation with gold increases

A recent analysis by Fidelity revealed that Bitcoin’s correlation with gold increased in 2023 and broke away from its previous inverse relationship with interest rates, even as global rates rose. The one-year rolling correlation between Bitcoin and gold currently stands at 0.80, the highest it has ever been, according to Longtermtrends.

Regarding the recent launch of spot Bitcoin ETFs, Wood expressed that she was not surprised by the subsequent price correction. Bitcoin experienced a 20% drop from $48,500 to $38,740 a few hours after the launch Wood had anticipated a “sell on the news” event before the ETF launch.

However, she pointed out that 15 million out of the 19.5 million Bitcoins currently in circulation have remained untouched for 155 days, suggesting that most Bitcoin holders are taking a long-term perspective on their investments.

ARK Invest’s role in the ETF market

ARK Invest was among the ten ETF issuers that launched a spot Bitcoin ETF on January 11, named the ARK 21Shares Bitcoin ETF. This ETF has accumulated $705.8 million worth of Bitcoin holdings, making it one of the leading products in the market, as per BitMEX Research data. Only Grayscale’s GBTC, BlackRock’s IBIT, and Fidelity’s FBTC products hold more Bitcoin.

In addition to their involvement in the ETF market, ARK Invest has made significant investments in cryptocurrency exchange Coinbase stock (COIN). As of February 2022, they held 7.187 million shares worth $843 million across several ETFs. However, they have been steadily selling COIN shares since June 7, 2022, when their holdings peaked at 11.43 million shares.