Bitcoin is replacing the historical role of gold

Cathie Wood, well-known CEO of fund manager Ark Invest, argues that Bitcoin is on the verge of replacing gold as a store of value asset, growing in adoption and offering itself to the public with greater appeal.

Since the approval of the first spot ETFs on cryptocurrency, US investors have started to shift their investments from gold to Bitcoin, sensing the possibility of a significant appreciation in the coming years.

The same Cathie Wood is strongly bullish on digital gold, to the point of predicting a future price of 1.5 million dollars by 2030.

All the details below.

Cathie Wood: a process of replacing gold with Bitcoin is underway

Cathie Wood, billionaire investor and CEO of investment management company Ark Invest, believes that Bitcoin is on the verge of replacing gold after over 50 years of the yellow commodity’s dominance in international financial markets.

This is what emerged in a chat on February 4th with Ark’s Chief Futurist, Brett Winton, on the company’s YouTube channel, where Wood reiterated his public support for the cryptocurrency by explicitly stating that:

“Compared to gold, Bitcoin is on the rise. Now there is a substitution with Bitcoin and we think it will continue now that there is a less friction-filled way to access Bitcoin”

Despite recent studies by Bloomberg analyst Mike McGlone highlighting a more advantageous situation for gold compared to its virtual counterpart, with the ratio between the two resources dropping by 40% from the November 2021 highs (see chart below), Cathie Wood seems to be convinced of the resilience of the cryptocurrency.

In particular, what convinced the CEO of Ark was the strong pump of the crypto recorded during the regional banking crisis in March of last year, in which financial institutions such as Silicon Valley Bank, Silvergate Bank, Signature Bank, and First Republic Bank were forced to suspend their operations with a government bail out.

Note how in these crisis situations, Bitcoin remains the safest asset to position oneself to cover market risks: while the index of US Regional Banks was imploding on itself, the crypto was increasing in value.

In this context, it must be recognized, however, that gold has also met the expectations of its investors by acting as a safe haven during the last few years and managing to quickly recover new highs after the bearish market of 2022.

From late 2022/early 2023, the raw material has experienced a strong rally that has pushed its prices from $1650 per ingot to the current $2025.

Even Bitcoin has printed a similar trajectory on the chart, growing throughout 2023 without, however, reaching new price highs.

In a recent analysis by Fidelity, it has emerged that the correlation between Bitcoin and gold has exponentially increased since 2022, recently reaching its highest levels ever.

The two assets have decoupled from the previous inverse relationship with interest rates

and they started moving in a very similar way, but with different volatility and volumes.

As we can see in the chart from Longtermtrends, the one-year moving correlation between Bitcoin and gold is currently 0.80.

Ark Invest CEO predicts a Bitcoin price of $1.5 million by 20230

It is not news that Cathie Wood is optimistic about the future of Bitcoin: in addition to praising the cryptocurrency’s superior performance compared to gold, the CEO of Ark Invest has publicly revealed that she is a loyal supporter of the cryptocurrency and its underlying technology.

According to a recent report published by ARK, it was recommended to investors to allocate an extremely high portion of their investment portfolio, equal to 19.4%, in Bitcoin in order to maximize future returns.

The recommended allocation by the fund was only 0.5% in 2015, growing by 6.2% in 2022 and subsequently reaching nearly 20% in the wake of the evolution of cryptocurrency and its strong performance as the dominant asset class of the last decade.

Cathie Wood is so bullish on Bitcoin that in a recent interview for CNBC she predicted a price of the crypto above $600,000 by 2030 as a base scenario, while she predicted an incredible price of $1.5 million in the next 6 years in the hypothesis of favorable conditions for the crypto sector.

If Bitcoin were to really reach $1.5 million, it would have an increase of as much as 34.8 times the current price.

Wood’s support for Bitcoin, much stronger than that for gold,  has led her investment fund to start offering exposure to the orange currency to its clients, through an exchange traded fund.

The ARK 21Shares Bitcoin (ARKB) spot ETF, issued by ARK Invest on January 11th, in conjunction with the SEC’s approval for 10 other similar investment vehicles, immediately achieved a privileged position, establishing itself as the fourth largest managed AUM fund.

Behind only Grayscale, BlackRock, and Fidelity, ARK 21 Shares currently controls 16,415 BTC worth 705 million dollars, in a constant daily growth trend.

Every day hundreds, if not thousands, of Bitcoins are added to the fund in question, partly coming from Grayscale customers who are moving for greater convenience in terms of fees. 

Regarding the recent launch of spot ETFs, Cathie Wood stated that she was not surprised by the 20% price crash that Bitcoin experienced from January 11th to January 22nd.

Before the various listings, the investor had predicted a typical “sell the news” event with a bearish momentum, however contained, which would have exhausted itself within a few days.

Wood remains convinced that Bitcoin is on the right path to reach new highs in the coming months, with the “strong hands” still holding the majority of circulating Bitcoins.

It is interesting to note that out of the 19.5 million BTC in circulation, 15 million have not moved in the last 155 days, confirming the long-term appreciation perspective of major investors.