Cathie Wood, CEO of ARK Invest, warned that the U.S. economy is at risk of a recession, contradicting U.S. Treasury Secretary Scott Bessent, who dismissed such concerns.
Cathie Wood, CEO of ARK Invest, warned that the U.S. economy is at risk of a recession, contradicting U.S. Treasury Secretary Scott Bessent, who dismissed such concerns. Speaking at the Digital Asset Summit in New York on March 18, she said the velocity of money is slowing dramatically, a sign that consumers and businesses are spending and investing less. She believes the White House is underestimating the economic impact of President Donald Trump’s tariff policies and that a downturn could push the administration and the Federal Reserve to adopt tax cuts and looser monetary policies.
Market watchers are closely following the Federal Reserve’s next steps. Investors on Polymarket are betting that the Fed will halt its quantitative tightening program before May. Meanwhile, CME Group’s Fed Fund futures indicate a 65% chance that interest rates will be lower by the Fed’s June 18 meeting, increasing expectations of multiple rate cuts later in the year. The probability of rate cuts has been growing as economic uncertainty continues.
ARK has been a strong player in cryptocurrency investments and remains committed to its long-term strategy despite recent market fluctuations. The firm’s spot Bitcoin exchange-traded fund (ETF), launched with 21Shares, was approved in January 2024 and now holds over $3.9 billion in net assets. Although spot Bitcoin ETFs have seen outflows recently, Wood remains confident, stating, “Long-term innovation wins as we go through these trials and tribulations.”
Beyond Bitcoin, ARK has invested in Ethereum and Solana, expanding its crypto portfolio. Wood noted that regulatory changes have made institutions more comfortable with crypto assets. She referenced the response to a 2016 ARK research paper, “Bitcoin: Ringing the Bell for a New Asset Class,” saying that many institutions that once dismissed crypto are now reconsidering their stance. “They have a fiduciary responsibility to expose their clients to a new asset class,” she said.
ARK is also working with Eaglebrook Advisors to provide crypto portfolio solutions to wealth managers. While crypto markets have faced corrections, Wood emphasized that ARK’s strategy is based on long-term potential rather than short-term price movements.
She also pointed out that if a recession does occur, it could give the Federal Reserve and the administration more room to maneuver. A shrinking GDP, she said, could lead to policies that stimulate economic growth, such as tax cuts and monetary easing. As economic and market uncertainty continues, investors are watching both traditional and digital asset markets for signs of what’s next.
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