Cathie Wood Sees Bitcoin Outpacing Gold as Digital Currency Gains Ground
Cathie Wood, founder of ARK Invest, believes that Bitcoin's time to shine has arrived, particularly in its performance against gold. According to Wood, a recent chart from ARK Invest shows that Bitcoin is gaining ground against gold, marking a significant turn in favor of the digital currency.
Wood explained that Bitcoin can outperform gold without necessarily increasing in value in dollars. This is because the ratio between Bitcoin's price and gold's price measures how many ounces of gold one Bitcoin could buy, which improves when Bitcoin appreciates faster than gold or when gold falls while Bitcoin holds its price.
However, Wood noted that a rising ratio does not guarantee a dollar profit for Bitcoin investors. In fact, if the price of gold falls further, Bitcoin can lose value and still outperform gold due to the difference in their price changes.
ARK Invest's research shows that since 2019, Bitcoin's correlation with gold has been around 0.1, indicating a weak relationship between the two assets. Wood attributed this to the fact that Bitcoin is often referred to as 'digital gold,' but its price does not necessarily follow gold's performance.
Wood expects technology-led investment to support the US dollar while productivity gains reduce inflation, which could further pressure gold prices. However, some market analysts, such as Raoul Pal, believe that dollar weakness could help support a sustained crypto recovery, including Bitcoin's advance.