ARK Invest CEO Cathie Wood thinks that Bitcoin BTC/USD could be today’s “gold standard” and increase purchasing power.
What Happened: Wood’s recent comments were a part of her response to Elon Musk’s question about the current ratio of the S&P market cap to GDP.
What do you think of the unusually high ratio of S&P market cap to GDP?— Elon Musk (@elonmusk) April 6, 2021
“What do you think of the unusually high ratio of S&P market cap to GDP?” Tesla Inc TSLA CEO asked Wood on Twitter.
Wood responded a few days later, saying she had a hypothesis about why this may be the case.
“In the late 1800s and early 1900s - as telephone, electricity, and the automobile were emerging - the US equity market cap relative to GDP appears to have been 2-3 times higher than it is today,” she said.
ARK Invest founder noted that these technology-enabled platforms are deflationary, thanks to learning curves, or Wrights Law, and the gold standard was in effect during this era.
“As deflation pressured an increasingly difficult-to-measure nominal GDP (the denominator), exponential unit growth and rapid productivity gains increased the quality of earnings while low-interest rates boosted their capitalization (the numerator),” explained Wood.
“The technologically-enabled innovation evolving today dwarfs that of the late 1800s/early 1900s: genomic sequencing, robotics, energy storage, artificial intelligence, and blockchain technology. Moreover, Bitcoin could be today’s “gold standard,” increasing purchasing power!”
Why It Matters: Wood is a known advocate of Bitcoin, and at the helm of ARK Invest, her bullish stance on the cryptocurrency is apparent.
ARK is the largest holder of shares of the Grayscale Bitcoin Trust (OTCMKTS: GBTC), with over 8.5 million shares held.
On a recent podcast breaking down ARK Invest’s Bid Ideas Report, Wood commented on Bitcoin’s market cap crossing a trillion-dollar milestone.
“One trillion dollars is just half of what Apple is worth, and yet this is a global digital monetary ecosystem, and Bitcoin is the reserve currency of that ecosystem, and that is a very big idea,” she said.
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