- Cathie Wood said bitcoin could become part of a standard investment portfolio with a 20% allocation.
- She said institutional interest was picking up and that bitcoin will become a “better accepted new asset class.”
- Wood also told CNBC that she remains confident about Tesla despite its recent plunge.
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Ark Invest’s Cathie Wood has said bitcoin could become a central part of investors’ portfolios as it becomes a “better accepted new asset class”, leading to a 60-20-20 split between stocks, bonds, and the cryptocurrency.
The Ark boss predicted bitcoin would stabilize and become a more widely accepted asset. “We are seeing institutional movement into the space, and we’re seeing the diversification of balance sheets from cash into bitcoin.”
Bitcoin rose 7% on Tuesday morning to $53,900, with analysts citing another wave of institutional investment as the driver.
Goldman Sachs said a survey of 300 clients found that 40% had exposure to crypto, while bitcoin-services provider NYDIG announced on Monday that it had raised $200 million from Wall Street names including Morgan Stanley.
Wood told CNBC that she thought bitcoin would start to behave “more like the fixed-income markets, believe it or not.”
She said the historic fall in bond yields seen in recent years makes the idea of a portfolio with 60% stocks and 40% bonds “problematic.”
“We’ve been through a 40 year bull market in bonds. We would not be surprised to see [bitcoin] become a part of those percentages.” She suggested investors could start to put 20% in bonds and 20% in bitcoin.
Wood shot to prominence in 2020 after making hugely successful bets on fast-growing companies such as Tesla.
Yet the more expensive parts of the market have been rocked in recent days by rising bond yields, triggering a more than 30% drop in Tesla and 26% fall in Ark’s Innovation ETF over the last month.
Despite this, Wood said Ark’s confidence in Tesla “has gone up”, in part because it appears not to have lost its share of the electric vehicle market despite competition. She said Ark is about to publish a new price target, hopefully “within a week or two.”
Wood also said she was confident that Tesla would be able to bring about autonomous driving “much faster than most analysts and investors expect,” after Elon Musk tweeted that the company was doubling the size of its self-driving beta program.