Investors Flock to #Bitcoin After Bitcoin #ETF Launch.
Cathie Wood, the CEO of ARK Invest, predicts that the trend of replacing gold with Bitcoin will continue in the near future. This significant shift in the investment strategy of gold enthusiasts has become more evident, especially after the introduction of spot Bitcoin exchange-traded funds (ETFs), which have made it easier and more efficient for investors to access Bitcoin.
Cathie Wood, the head of ARK Invest, noted that Bitcoin is increasingly taking on the role of gold as the preferred investment asset. One of the reasons is the now simpler and more accessible way to invest in Bitcoin through ETFs.
This trend, resembling a "great migration" from gold to cryptocurrency, has gained momentum in the market. Cathie Wood emphasized that, similar to gold, Bitcoin is viewed as a "risky asset," particularly during times when the banking sector shows signs of instability.
The CEO of ARK Invest pointed out that this trend was significantly noticeable during the regional banking crisis in March 2023. At that time, the price of Bitcoin surged by 40% after regional banks encountered difficulties.
Cathie Wood added, "The regional bank index fell and is now rising again. This increased interest in Bitcoin suggests that investors are seeking higher-quality and safer investment alternatives."
A recent analysis conducted by Fidelity showed that the correlation between the price of Bitcoin and the price of gold increased in 2023, deviating from the traditional inverse relationship between the price of Bitcoin and interest rates, even as interest rates rose worldwide. The current annual rolling correlation between Bitcoin and gold has reached a historic high of 0.80.
Regarding the launch of spot Bitcoin ETFs, Cathie Wood mentioned that she was not surprised by the price drop of Bitcoin, which decreased by 20% from $48,500 to $38,740 just hours after its market debut on January 24th. Before the ETF's launch, Wood had predicted that this event would trigger a "sell-the-news" reaction.
It is noteworthy that 15 million out of the total 19.5 million Bitcoins in circulation have remained untouched for up to 155 days, suggesting that the majority of Bitcoin holders have a long-term investment horizon and are not easily swayed by short-term price fluctuations.
ARK Invest was one of the ten issuers of spot Bitcoin ETFs launched on January 11th. Their ETF, the ARK 21Shares Bitcoin ETF, currently holds $705.8 million in Bitcoin, making it one of the largest products of its kind. Only products from companies like Grayscale, BlackRock, and Fidelity hold more Bitcoin.
ARK Invest also became a major investor in the shares of the cryptocurrency exchange Coinbase in February 2022 and currently holds nearly 7.2 million shares worth $843 million across several of its ETFs. However, since June 2023, they have been gradually reducing their stake in these shares, having initially held 11.43 million Coinbase shares.
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,,The information and views presented in this article are intended solely for educational purposes and should not be taken as investment advice in any situation. The content of these pages should not be regarded as financial, investment, or any other form of advice. We caution that investing in cryptocurrencies can be risky and may lead to financial losses.“
