Cathie Wood: Bitcoin Is Set To Rally After 'Shallowest Four-Year Cycle Decline'

Core Viewpoint - ARK Invest CEO Cathie Wood predicts that Bitcoin's current four-year cycle drawdown will be the shallowest in its history, setting the stage for a potential price increase [1]. Group 1: Bitcoin Exposure and Market Dynamics - ARK Invest gains Bitcoin exposure primarily through its spot Bitcoin ETF, ARKB, favoring direct exposure over equity proxies like Strategy (NASDAQ:MSTR) [2]. - Recent volatility in Bitcoin prices was largely attributed to an October 10 flash crash linked to a software issue at Binance, which caused widespread auto-deleveraging [2]. - The flash crash resulted in an estimated $28 billion in forced liquidations, creating residual market pressure, but ARK believes the deleveraging cycle is largely complete [3]. Group 2: Price Predictions and Market Behavior - ARK expects Bitcoin to be nearing the end of its current downturn, with a potential retest of the $80,000–$90,000 range, although they anticipate support to hold [3]. - Wood asserts that this cycle's decline should be the shallowest on record, positioning Bitcoin for renewed upside [3]. Group 3: Bitcoin's Role and Performance - Wood describes Bitcoin as "three revolutions in one": a rules-based global monetary system, a major technological innovation, and the leading asset of a new asset class [4]. - Despite being labeled as "digital gold," ARK notes that Bitcoin and gold show low correlation over a full market cycle [4]. - Bitcoin has significantly outperformed gold since the 2022 equity bear market, behaving largely as a risk-on asset during the recovery [5]. Group 4: Institutional Interest and Future Outlook - With the launch of spot Bitcoin ETFs, institutional investors are still studying Bitcoin's behavior and four-year cycle dynamics, which has slowed large-scale inflows [6]. - Over time, ARK believes Bitcoin can function as both a risk-on and risk-off asset, hedging inflation through its fixed supply and offering protection against deflation and financial stress due to its decentralized design [6]. - ARK expects traditional asset management to evolve alongside decentralized finance and continues to favor direct exposure over leveraged or indirect Bitcoin vehicles [7].