For Cathie Wood, bitcoin is a “protection against currency devaluations”

The boss of Ark Invest believes that the rise in bitcoin is partly explained by the monetary devaluations taking place in certain parts of the globe.

In mid-March, bitcoin reached a new all-time high, trading at $73,750 according to data from Coinmarketcap. This increase was partly attributed to the rush of investors to spot bitcoin ETFs, launched in mid-January. The queen of cryptocurrencies has gained more than 63% since the start of the year and 50% in three months.

But for tech popess Cathie Wood, there is another explanation behind this rebound.

“There are currency devaluations that are happening that people are not talking about,” the latter said on CNBC, citing the currencies of Nigeria, Egypt and Argentina.

Faced with this observation, bitcoin can be seen as “protection against monetary devaluation as well as the loss of purchasing power and wealth”. The boss of Ark Invest notably described bitcoin as an “insurance policy” against “rogue regimes”.

Despite this statement, bitcoin can also waltz depending on the macroeconomic context. This week, for example, bitcoin is going through a period of turbulence which can be explained by a more favorable economic situation in the United States. Indeed, manufacturing activity started to rise again in March, boosting the DXY dollar index (which compares the value of a dollar against a basket of foreign currencies including the yen, the pound sterling and the euro) to its highest since mid-November. And when the dollar is strong, bitcoin is of less interest to investors.

On January 10, the American stock market watchdog (the SEC) has authorized 11 spot bitcoin ETFs, offered in particular by asset managers like Blackrock and Fidelity. An ETF (or Exchange Traded Funds) is an index fund trading on a stock exchange which follows the evolution of a stock index (or one or more financial or physical assets, such as gold) by replicating the increase as well as the drop in the price of this index (or these assets).