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Mind Of Mav
Gold Being Replaced by Bitcoin?
Post the launch of spot Bitcoin exchange-traded funds (ETFs), a shift in investor preference from gold to Bitcoin is becoming evident, suggests Cathie Woods, CEO of ARK Invest. In a discussion on ARK Invest’s YouTube channel on February 4, with chief futurist Brett Winton, Woods pointed out the growing trend of investors substituting gold with Bitcoin, facilitated by the newfound ease of accessing Bitcoin via ETFs.
Woods anticipates Bitcoin solidifying its status as a “risk-off asset,” drawing parallels to gold, especially during periods of instability in the banking sector. She recalled the surge in Bitcoin’s value by 40% during the regional bank crisis in the United States in March 2023, highlighting Bitcoin’s emerging role as a safe-haven asset.
Fidelity’s recent analysis supports this viewpoint, indicating a strengthening correlation between Bitcoin and gold throughout 2023, diverging from its historically inverse relationship with interest rates, even amidst a global uptick in rates. Presently, the one-year rolling correlation between Bitcoin and gold is at a record high of 0.80, according to Longtermtrends.
Addressing the market’s response to the spot Bitcoin ETF launch, Woods wasn’t taken aback by the subsequent price correction, wherein Bitcoin’s value dipped by 20% from $48,500 to $38,740 shortly after the ETFs went live, as per CoinGecko data. Woods had previously anticipated a “sell on the news” reaction surrounding the launch.
Nonetheless, she highlighted the resilience within the Bitcoin community, noting that 15 million of the existing 19.5 million Bitcoin haven’t been traded in 155 days, suggesting a long-term investment strategy by the majority of Bitcoin holders.
ARK Invest’s own ARK 21Shares Bitcoin ETF, one of the ten spot Bitcoin ETFs introduced on January 11, has amassed $705.8 million in Bitcoin, according to BitMEX Research data. Among the ETFs, only Grayscale’s GBTC, BlackRock’s IBIT, and Fidelity’s FBTC hold a larger Bitcoin reserve.
Despite ARK Invest’s active engagement in the cryptocurrency sphere, including significant investments in Coinbase, where it currently holds shares worth $843 million, the firm has been systematically divesting its Coinbase stock since June 7, 2023, when it held 11.43 million shares.
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