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Cathie Wood: Crypto Market in a ‘Period of Explosive Innovation’

3 mins
Updated by Kyle Baird
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In Brief

  • ARK Invest's Cathie Wood believes that we “couldn’t be further” from a crypto bubble.
  • Wood cites the success of Robinhood and Coinbase being indicative of “explosive innovation.”
  • Her insights follow earlier claims made by John Paulson that we are in a “bubble.”
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In a recent interview with Yahoo Finance, founder, CEO, and CIO of Ark Capital (global asset investment group), Cathie Wood, has refuted claims made by skeptics such as John Paulson that the crypto market is only a short-term gamble and a bubble that will inevitably burst.

When host Brian Sozzi asked Cathie Wood for comment regarding skepticism from the likes of Paulson, Wood said “Many people ask me: are we in a bubble? We couldn’t be further from it” continuing with a remark suggesting that those who bet against cryptocurrency are doing so out of ignorance rather than diligence, She added that “I do not believe that investors, the average investor shall I say, understands how provocative these next five to 15 years are going to be.”

The provocative nature of this not-too-distant future which Wood is referring to is the speed at which the crypto and blockchain sectors are growing in terms of innovation and industry, citing the likes of Coinbase as an example of innovation within the space. She also touched on Robinhood as a traditional industry player which has successfully pivoted towards crypto.

Cathie Wood burst’s John Paulson’s ‘crypto bubble’ theory

Cathie Wood’s remarks come off the back of an earlier interview with prominent investor and short-seller John Paulson, conducted by Bloomberg Wealth’s David Rubenstein on Sept 1. In the interview, Paulson discussed what he believes to be a lack of viability with regard to investing in the crypto market.

According to Paulson, the cryptocurrency market is a “bubble” with “a limited supply of nothing” as he believes that crypto has “no intrinsic value,” concluding that he “wouldn’t recommend anyone invest in cryptocurrencies.” In addition to these comments, Paulson slammed the crypto investment market even further, claiming that crypto has “unlimited downsides” and is “too volatile to short” — likening investments in crypto to a “get-rich-quick-scheme.”

John Paulson is a multi-billionaire hedge fund manager who leads the New York-based investment management firm Paulson & Co, which he co-founded in 1994. Paulson is known for being the subject of the critically lauded book ‘The Greatest Trade Ever: The Behind-the-Scenes Story of How John Paulson Defied Wall Street and Made Financial History’ which chronicles how Paulson raked in over $15B in 2006 by betting massively against the housing bubble and winning.

His comments are indicative of what Cathie Wood describes as an overly risk-averse, “benchmark sensitive” baby boomer generation of investors, who overly rely on statistical data provided by indices such as NASDAQ as a result of having lived through several significant bubbles such as the dotcom bubble and the 2008-2009 meltdown.

According to Wood, the problem here is that those who rely solely on these indices to inform their investment decisions are missing out on key emerging and innovative markets which such indices simply do not cover, such as blockchain and crypto,

“Guess what? A lot of innovation, which is all about the future, is not captured by indices. In fact, very little of it we believe is captured by the indices” and she adds that “We are in a period of explosive innovation… We’ve never been in a period ever in history where we’ve had five major innovation platforms involving 14 different technologies all moving into s-curves…  as these s-curves feed into each other [they will] enter exponential growth trajectories that we have never seen before.”

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