Bitcoin's banking crisis spike will 'draw more institutions': Cathie Wood of ARK

By: Michael Wilson

March 22, 2023 5:46 AM

Cathie Wood was impressed that Bitcoin "performed in a totally different way" in response to the recent banking crisis than the equity market.

The value proposition of Bitcoin (BTC) is on full show amid the current banking crisis, which, according to ARK Invest CEO Cathie Wood, will only "draw more institutions" to the BTC market over time.

In a March 21 Bloomberg interview, Wood discussed BTC's recent price spike, suggesting that its pricing behavior during the crisis "will attract more institutions."

"The fact that Bitcoin moved extremely differently than equity markets in particular was quite illuminating," she continued.

According to Oliver Linch, CEO of Seattle-based crypto exchange Bittrex, institutional interest in Bitcoin may have already arrived.

In a March 21 interview on The Wolf Of All Streets podcast, Linch stated that several large banks invested in cryptocurrency as an investment product far before the recent banking crisis:

"The great talking point of this bearish market is institutional involvement in cryptocurrency. Every major bank now has a substantial crypto desk, not only for trading but also for collaborations."

But, he stated that there is still a gap between traditional financial institutions and crypto businesses, which has hampered institutional adoption in recent months.

"Historically, those major players have been the biggest drivers of innovation," he said, adding that the two sides are currently "locked in a bit of a rut" and that the "real change" will not occur until they quit competing for superiority.

"It's not cryptocurrency vs Goldman Sachs or cryptocurrency versus institutions. It's a competition to see who can do crypto best."

In terms of the impact of institutional interest on Bitcoin's price, Wood explained in the interview that ARK Invest's $1-1.5 million BTC price prediction by 2030 was based on an institutional investor BTC allocation analysis, which estimated that most firms would allocate between 2.5% and 6.5% to BTC in their investment portfolios.

"These are the kinds of allocations they would have made to growing, new asset classes like real estate in the 1970s and small caps in the 1980s and 1990s," Wood noted.

ARK Invest predicts that institutional investors would allocate between 2.5% and 6.5% of their portfolio to Bitcoin, pushing the price of the cryptocurrency upwards toward $1.5 million. Source: ARK Invest

Linch, on the other hand, feels that "aggressive" institutional adoption will occur when opportunities become more obvious:

"Show them a way that it can be done and it can make them money and I guarantee you they won't stand in the way of that. They'll go all out to capitalize on that opportunity."

Following the failures of Silvergate, Silicon Valley Bank, and Signature banks, positive mood has enveloped Bitcoin. According to CoinGecko data, Bitcoin has increased 43.6% since its most recent low on March 11, compared to a 25.3% increase in the broader crypto market during the same period.