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Cathie Wood, the CEO of Ark Investments recently said that Bitcoin (BTC) will soon become an integral part of a “balanced portfolio” in addition to stocks and bonds. Furthermore, in a bold statement, Wood added that cryptocurrencies could stabilize very soon and eventually behave like bonds.
Speaking at CNBC’s “Closing Bell” Wood added:
“We think as it becomes a better accepted new asset class … We do think it will behave, actually, I would say more like the fixed income markets, believe it or not”.
On Tuesday, March 9, Bitcoin (BTC) made a surge above $54,000 after staying under pressure over the last week. At press time, BTC is trading at a price of $53,584 with a market cap of $1.0 trillion and is already up 80% year-to-date.
Bitcoin (BTC) has been often touted as “digital gold” and a replacement to the yellow metal, however, its highly volatile nature has made investors question its stability as a hedge asset.
Wood: Bitcoin (BTC) Will Eat Into the Bond Market Share
In another interesting comparison, Wood compared Bitcoin (BTC) to real-estate. Thus, she goes on to add that Bitcoin (BTC) could be part of investors’ balanced portfolio wherein 60% is stocks and 40% as fixed income which is often bonds.
Wood thinks that Bitcoin will slowly eat into half of the fixed income market share aka bonds. She added:
“If you think about bonds from this level, this idea of a 60-40 balanced portfolio is a bit problematic. We’ve been through a 40-year bull market in bonds. We would not be surprised to see this new asset class become a part of those percentages. Maybe 60 equity, 20, 20”.
Wood’s Ark Investment has major exposure to automobile giant Tesla (NASDAQ: TSLA) which announced its $1.5 billion exposure to Bitcoin last month in February 2021.
In another interesting development, JPMorgan has filed with the SEC for a ‘Cryptocurrency Exposure Basket’ liked to the stocks of public listed companies having exposure in Bitcoin and other cryptocurrencies. The basket has exposure to 11 companies in total with names like MicroStrategy, Square, Riot Blockchain, and chipmaker NVIDIA.
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