Cathie Wood, founder and CEO of ARK Invest, said more regional banks could fail if the current banking crisis in the US is not resolved.
Wood discussed the factors that led to the closure of Silicon Valley Bank and Silvergate over the weekend, noting that it was the responsibility of the Federal Reserve to address the issue. He warned that focusing on lagging indicators like the CPI could steer the Federal Reserve away from the root cause of the problem: deflation in the economy caused by the inverted yield curve.
The failure of more regional banks would further centralize the US banking system, he said, adding that nationalization of the banking system is also a plausible risk.
The failure of three large technology and cryptocurrency-focused banks further cemented Wood’s optimism when it came to cryptocurrencies.
She saying that neither she nor the rest of the team that oversees cryptocurrency investments at ARK have been surprised by the current rally in the cryptocurrency market.
The market took a hit earlier this week when rumors of Silvergate’s possible insolvency shook investor confidence. After dipping below $20,000 and dragging the rest of the market with it, Bitcoin rallied to $22,000 when news about Signature bank broke Sunday night. Ethereum and the rest of the altcoin market followed, posting unusual returns in the wake of unprecedented market turmoil.
Wood believes that Bitcoin and Ethereum rallied because the blockchain networks they are based on are decentralized, transparent, and auditable.
“Banks are not, and in recent days they have become fewer,” he said. “Regulators have focused investors on the threat cryptocurrencies pose to users, but this theory was turned on its head this weekend.”
Cathie Wood’s confidence in the crypto market is also not a surprise.
Wood held onto his investments through 2022, even after suffering significant losses across the majority of ARK’s cryptocurrency portfolio. The fund’s commitment to the industry appears to have been recognized by investors, who increased their investments in the ARK ETF even as its tech venture portfolio tanked.
This post ARK Invest’s Cathie Wood “Not Surprised” by Crypto Market Rally
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