9 months ago
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Wood suggests that the ‘sell the new’ effect is among the main reasons behind the post-ETF price decline.
There is an ongoing shift from gold to Bitcoin, and the debut of eleven spot Bitcoin exchange-traded funds (ETFs) will continue to fuel this trend, Cathie Wood, ARK Invest CEO and Bitcoin holder, said in a recent broadcast.
“Even relative to gold, Bitcoin has been rising,” Wood stated. “There’s now a substitution into Bitcoin, and we think that is going to continue now that there is a much easier, less friction-filled way to access Bitcoin.”
Wood explained that the recent decline in Bitcoin’s price was potentially attributed to “a lot of anticipatory buying” before spot Bitcoin ETFs emerged. She suggested that some investors who bought Bitcoin in anticipation of ETF approval used the event as an opportunity to take profits. Wood already predicted this “sell the news” scenario before ETF approval.
Wood also highlighted the growing institutional adoption of Bitcoin during the US regional banking crisis last March as a testament to the big idea of Bitcoin as a store of value. Bitcoin surged by 40% during this period, while the regional bank index plummeted.
Bitcoin’s different reaction to the banking crisis compared to the regional bank index, according to Wood, suggests that Bitcoin acts more as a safe-haven asset. She called it “a flight to quality,” indicating that investors view Bitcoin as a top-quality asset to shelter from economic uncertainty.
Despite the recent price correction following the spot Bitcoin fund launch, Wood’s long-term outlook for Bitcoin remains optimistic. She noted that 15 million Bitcoin, about 77% of the total supply, is held by “strong hands” who haven’t moved any of their holdings in 155 days. This large and stable holding of Bitcoin could create a strong foundation that benefits Bitcoin’s future price.
In an interview with Schwab Network last month, Wood disclosed that at least 25% of her net worth is Bitcoin. She is one of the firmest advocates for Bitcoin’s long-term potential.
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