Cathie Wood, founder of world asset administration firm ARK Invest, says she sees a state of affairs the place central banks may begin accumulating Bitcoin and different crypto property.
In a brand new episode of The Breakdown podcast, the famous person hedge fund supervisor says her agency believes that deflation, not inflation, will hit world markets as shopper demand shifts from commodities to companies.
“We are pondering the a lot larger chance is deflation. I do know most individuals suppose that’s loopy given what’s occurring, however we’ve seen a crack in some commodity costs already, lumber an vital one. What we expect has occurred right here is customers have spent the final yr spending their cash on the one issues they may and these are items, durables and non-durable items.
Businesses had been behind the curve even earlier than the coronavirus due to the inverted yield curve. They had been afraid of a recession… So they had been fearful and positioned conservatively. Consumers took off shopping for items and now being vaccinated, they’re going to shift their market basket from items to companies… So I feel what’s going to occur right here is companies, which can be double and triple and quadruple ordering proper now to attempt and get provides, they’re going to get these provides because the market basket is shifting in the direction of companies, and I feel commodity costs are going to have a big fall into subsequent yr.”
With commodity costs sinking as companies attempt to do away with extra provide, Wood predicts that rising markets will take a large hit. She provides that the results of deflation will cascade into the fiat currencies of rising markets, which is able to drive their central banks to search refuge in Bitcoin and different cryptocurrencies.
“I feel although in rising markets, if commodity costs come down, plenty of them are linked to commodity costs, their currencies will come below stress. I feel what’s going to occur, as currencies come below stress, the speed of their cash will improve as extra and extra of their inhabitants shift into Bitcoin and different cryptocurrencies and property.
This is all the time true, once you’re speaking about currencies, inflation, deflation, it hits completely different areas of the world in a different way… I wouldn’t be stunned if a few of these rising market central banks begin accumulating Bitcoin and different currencies. If they know their forex goes down and that they’d be below assault for as reserves go down, possibly they’ve a steadiness [sheet] with Bitcoin and different crypto property.”
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