Bitcoin and other cryptocurrencies could end up being part of the portfolio recommended for everyday investors, Arkie’s Cathie Wood said Monday.
Wood, whose star investor rose dramatically last year thanks to the strong performance of his Ark Innovation ET ETF, told CNBC’s “Closing Bell” that he believed volatile cryptocurrencies would look like bonds.
“We believe that as it becomes a new asset class better accepted … We believe it will behave, in fact, I would say it looks more like fixed income markets, believe it or not,” Wood said .
Bitcoin has had a dramatic run to new highs after trading less than $ 10,000 per currency as recently as in September. Assets rose to nearly $ 58,000 on Feb. 21, according to Coin Metrics, before cooling slightly. It was trading at about $ 51,700 on Monday.
Although often referred to as “digital gold,” bitcoin does not translate into tandem with precious metals and its high level of volatility is more reminiscent of assets that are considered most risky. Wood said that at the time, the price of Bitcoin was more correlated with real estate prices.
Still, Wood said he believes Bitcoin could stabilize over time and become a part of the recommended portfolio for the average investor, accounting for 60% in shares and 40% in income. fixed, especially given the high price of bonds in relation to history.
“If you think about bonds at this level, this idea of a balanced portfolio of 60 to 40 is a bit problematic,” Wood said. “We’ve been through a bullish 40-year bond market. We wouldn’t be surprised to see this new asset class become part of those percentages. Maybe 60 equities, 20, 20,” Wood said.
Tesla, which has long been one of Ark’s largest positions, converted part of its cash balance to bitcoins earlier this year. Other companies have also increasingly adopted cryptocurrencies, either by supporting payments and transfers or by buying assets.
Ark’s flagship fund has fallen during the first months of 2021, with value rotation hurting some of Wood’s largest holdings. The investor said Monday that it still trusts its strategy and Tesla despite recent losses.