ARK Invest CEO Cathie Wood pointed out on the official Ark Invest YouTube channel that after the launch of a Bitcoin spot ETF, Bitcoin is gradually replacing gold.
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Big Ideas 2024 | Bitcoin’s optimal allocation is 19.4%, with a potential target price of $2.3 million
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Bitcoin’s self-proven hedging asset position
Bitcoin ETF’s decline after launch is a transfer from paper hands to diamond hands
Bitcoin has become a substitute for gold
Bitcoin’s self-proven hedging asset position
Although Bitcoin’s performance after the US banking crisis last year has been cited by many analysts as a classic case of “Bitcoin hedging ability,” Cathie Wood emphasized this once again.
She pointed out that when the US KBW Bank Index plummeted, Bitcoin quickly rose, rising more than 40% as of May last year, confirming its role as a risk hedging asset.
Bitcoin rose against the trend in March last year
Bitcoin ETF’s decline after launch is a manifestation of the public’s pursuit of high-quality and safe assets, according to Cathie Wood.
Regarding the decline of Bitcoin ETF after its launch, she pointed out that this is because many opportunistic investors bought Bitcoin in anticipation, and then a sell-off occurred, but she emphasized:
If you have been paying attention, you will understand that out of the existing circulating 19.5 million Bitcoins, about 15 million are held by what we call diamond hands in the long term, and they have not transferred Bitcoin for more than 155 days.
Bitcoin has become a substitute for gold
Cathie Wood finally quoted the Bitcoin to Gold Ratio to indicate that Bitcoin has consistently outperformed gold and has indeed become a substitute for gold. She said:
We believe this situation (outperforming gold) will continue because there is a simpler, less frictional way (spot ETF) to access Bitcoin. We also mentioned in Big Ideas 2024 that the participation of institutional investors will have an impact on the price of Bitcoin.
The Bitcoin to 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. Currently, the ratio of 20.7 is second only to the period of Bitcoin’s historical high in 2021.
Bitcoin to Gold Ratio
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Further reading
CoinGecko’s institutional market forecast predicts an average consensus price of $87,000 for Bitcoin after the halving
The end of the Grayscale era? Ark Invest clears all GBTC and buys BITO instead.