Cathie Wood Doubles Down on Crypto Despite Turmoil

November 25, 2022

ARK Investment Management’s Cathie Wood is doubling down on digital assets, investing in cryptocurrency exchanges and trusts, even as the crypto world deals with the aftermath of the spectacular FTX implosion earlier this month. 

The prominent portfolio manager said crypto still needs to be tested, and that going through crises, like the bankruptcy of FTX and a handful of other exchanges this year, will help determine its eventual survivors.

“[You need] to battle test the infrastructure, and the thesis, and again we think bitcoin is coming out of this smelling like a rose,” Wood said during an interview with Bloomberg this week.

ARK Investment Management funds bought more than 1.3 million shares of the crypto exchange Coinbase Global Inc. since the start of November, worth about $56 million, according to Bloomberg.

The ARK Next Generation Internet ETF (ARKW) also bought approximately 450,000 shares of the Grayscale Bitcoin Trust (GBTC) since the start of last week. Investors in that fund could benefit handsomely if the Securities and Exchange Committee approves its application for a conversion into a spot bitcoin ETF.

The investments buck the recent trend of top Wall Street investors, who are backing away from crypto, leaving ARK as one of a few major players to increase its exposure.

“The one thing that will be delayed is perhaps institutions stepping back and just saying, ‘OK, do we really understand this?’” she said. 

As the crypto industry weathers the storm of recent bankruptcies, Grayscale’ GBTC is also facing an uphill battle. In the days following the FTX crash, its discount to its net asset value widened, reaching a record 41.7% earlier this month. If the SEC approves the fund in ETF form, the price would trade in line with its net asset value, meaning investors could see overnight jumps in value.

The SEC, however, has denied spot bitcoin ETFs from listing on U.S. exchanges for over nine years, and Grayscale Investment Advisors, sued the agency in June, alleging it arbitrarily blocked GBTC’s conversion into an ETF.

Exchange-traded products focused on digital assets have lost favor this year as the price of crypto plummeted. While 58 new products launched globally in the first half of the year, just one debuted in all of October, according to Bloomberg data. 

While the price of bitcoin fell below $16,500 midday Friday—down from a record high of near $65,000 in November of last year—Wood upheld her forecast that bitcoin will hit $1 million per coin by 2030 in the same interview. 

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