Crypto is suffering, but that doesn’t mean that investors are all abandoning the market – far from it. In fact Cathie Wood, an ardent promoter of Bitcoin (BTC), has come out all guns blazing in support of crypto. The Ark Invest CEO shows no sign of revising her previous bullish assessment of Bitcoin and other cryptocurrencies.
In recent days, the value of Bitcoin has declined by almost 12.6% to hit a below $40,000 within 24 hours. On the other hand, Ethereum (ETH) declined by 16% and went to below $3K after a good price hike it held a few weeks ago.
Buying the dip
On May 18, Cathie Wood invested in Coinbase shortly after dropping Apple shares. Ark Invest bought 118,214 Coinbase shares to add to its existing holding in its ARK Innovation ETF.
She also added another 42,248 COIN shares for the ARK Next Generation Internet ETF. Coinbase shares were trading at $226 per share at the time of purchase, which way below the reference price of $250 in its direct listing and the high of $342.
The shares have been pressured lower since its April listing by fears about increased competition and now the fall in crypto prices..
Woods has sold almost all of the Apple shares held by Ark’s ETFs, making her Coinbase an even bolder one, given the lower risk associated with Apple stock. The company now owns 3,000 Apple shares.
Hopeful about Bitcoin but is ‘risk-off’ a valid explanation for crash?
Cathie Wood spoke about her optimistic perspective on Bitcoin in a recent Bloomberg interview. The CEO stated that Bitcoin’s value would increase to $500,000 in the future, despite the currency almost touching $30,000 on May 19.
She added that Bitcoin was currently being pushed lower because of the huge emotions and sentiment driving cryptocurrency investing, which can tend to be disengaged from fundamentals. But Woods doesn’t think that Bitcoin’s new price represents a ‘bottom’ just yet, despite the currency having its worst month since the beginning of the year.
Wood claimed that the “risk-off” environment on the stock markets was ultimately to blame for bitcoin’s crash.
“I think what’s happening right now is because the stock market — the highly volatile part of the stock market, the innovation part of the stock market — has gone through such a correction.”
Bitcoin and stock correlation has broken down
However, those remarks have been criticised for not really aligning with the facts, as the correlation between bitcoin and stocks has fallen drastically in recent months (for the Nasdaq it has fallen from from 0.94 in March 2020 to 0.59 now). Also one of the reasons behind the stock wobbles has been inflation fears, which just days ago was being cited by bitcoin supporters such as Wood as a reason for bitcoin’s price appreciation.
In her interview with Bloomberg, Wood also addressed the remarks that Elon Musk made about the environmental impact of Bitcoin mining. Wood said that Bitcoin mining was shifting to new sources of energy, including solar mining.
Wood also added that the possibility of the Securities and Exchange Commission (SEC) approving a Bitcoin ETF in the USA had increased now that a market correction has happened.
Bitcoin was trading at around $39,000 at the time of writing . This is a sharp decline compared to when it was trading at an all-time high of around $64,000 in April.
In early May, Wood joined Amun Holdings as a board member. Amun is the parent firm of 21Shares, which offers exchange-traded products in Switzerland.
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