• Bitcoin clearly catching up since March low
• Cathie Wood: More institutes will rely on Bitcoin
• According to Wood, cryptos should have this share in institutional portfolios
The collapse of the US Silicon Valley Bank (SVB), which has since been closed and is under state control, triggered a tremor on the stock market. The DAX and Dow Jones came under significant pressure and the uncertainty of stock investors remained high afterwards, which was reflected in fluctuating prices. Quite different, however, with Bitcoin. According to “CoinMarketCap”, this also fell to a multi-week low of 19,628.25 US dollars on March 10 – but since then it has risen significantly again. Bitcoin is currently trading at around 28,352 US dollars, around 44 percent above its March low (as of March 29, 2023). Since the beginning of the year, the largest cryptocurrency has even climbed by around 71.5 percent, while the DAX only rose by 10.05 percent and the Dow Jones even lost around 1.30 percent (as of the closing price on March 29, 2023). According to ARK Invest boss Cathie Wood, the strength of Bitcoin in this environment could mean that more institutional investors are now investing in the cyber currency.
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According to Wood, crypto networks convince with strength and stability
After the recent bank failures, Bitcoin “moved very differently from the stock markets,” said Cathie Wood in an interview with “Bloomberg”. That was “very instructive”, the star investor continued. In fact, the largest cryptocurrency may have benefited from some investors losing faith in traditional finance amid the banking turmoil. In view of the difficulties encountered by some banks, many customers withdrew their deposits from US regional banks in particular, but also from the major Swiss bank Credit Suisse, for example, which further aggravated the problems faced by financial institutions and made rescue measures necessary. Bitcoin may have benefited from this as a decentralized currency network and investment alternative.
According to cryptonews, ARK Invest argued in a weekly newsletter that the rally was a sign of bitcoin’s importance as a safe haven. “While the US banking system went into a spasm in response to the bank runs threatening regional banks, Bitcoin, Ethereum and other crypto networks didn’t rest for a moment,” Cathie Wood tweeted in mid-March – emphasizing the stability of the digital Currencies versus the traditional financial system.
While the US banking system was seizing up in response to bank runs threatening regional banks, Bitcoin, Ethereum, and other crypto networks didn’t skip a beat. Instability in the banking system threatened stablecoins, the on-ramps to DeFi, in stark contrast to regulatory rhetoric https://t.co/r5xwC96Pdj
– Cathie Wood (@CathieDWood) March 15, 2023
“In light of the banking crises in the US and Europe, the rise in Bitcoin prices indicates that lax regulatory oversight has had no impact on the decentralized, transparent and auditable cryptocurrency ecosystem,” ARK analyst Yassine Elmandjra wrote in the cryptocurrency newsletter, according to cryptonews investment company.
Wood with a recommendation for a crypto share in the portfolio of institutional investors
The Bitcoin rally should have positive consequences for the crypto world. For example, Wood assumes in relation to “Bloomberg” that “the behavior of the [Bitcoin-]price will attract more institutions during this crisis”. ARK Invest also recently produced a report aimed at institutional investors and looked at the allocation they should make if they want to use cryptocurrencies as a new asset class to diversify their portfolios. The star investor recommends a crypto position that is “anywhere between 2.5 percent and 6.5 percent” of the portfolio, “so it’s not crazy. “It’s the kind of allocation that she’s making in emerging, new asset classes like real estate would have done in the 70s, emerging markets and small caps in the 80s and 90s,” Wood continued in the interview. In the meantime, the assets she mentioned have become an integral part of many portfolios. Perhaps this will be the case in view of the new Bitcoin – Strength will soon apply to cryptocurrencies as well.
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