Cathie Wood, founder and CEO of leading investment management firm Ark Invest, thinks Bitcoin (BTC) is an insurance policy against rogue regimes as more users flock to it amid the devaluation of their national currencies.
During an interview with CNBC, Wood tagged Bitcoin as a hedge against devaluation and loss of purchasing power and wealth, insisting that the mass adoption of the digital asset signals a flight to safety in various parts of the world.
An Insurance Policy Against Rogue Regimes
Over the past few months, several fiat currencies have depreciated against the United States dollar as countries struggle with high inflation rates. Some of those are the Nigerian naira, which has lost over 50% of its value, and the Egyptian pound, which has depreciated by roughly 40%.
Other currencies include the Argentine peso, the Japanese yen, the Turkish lira, the Lebanon pound, and the Pakistani Rupee. The free fall of these currencies caused BTC to hit new all-time highs against them long before registering a new peak against the USD.
Wood believes these currency devaluations and flows into the spot Bitcoin ETF market were the reasons BTC surged dramatically in the past few weeks. Users deemed the cryptocurrency a hedge against unfavorable monetary policies and chose to store their money in it.
“I think this is a flight to safety, believe it or not, taking place. A hedge against devaluation. A hedge against a loss of purchasing power and wealth…I think this is an insurance policy against rogue regimes or against just horrible fiscal and monetary policies,” the Ark Invest founder said.
No Counterparty Risk
Wood further explained that this is not the first time Bitcoin has surged during a traditional financial crisis. She cited the United States banking crisis of March 2023, when regional banks collapsed, and BTC spiked roughly 40% afterward.
Between March and April last year, around four American lending institutions, including Silvergate and Signature Bank, shuttered their services after bank runs that caused a surge in deposit outflows. While the shares of the battered financial institutions fell heavily, BTC moved in the opposite direction, recording substantial gains despite the crypto market suffering from the pangs of the bear cycle.
Ark Invest’s CEO said such an occurrence shows BTC has no counterparty risk and is both a risk on and risk off asset.
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