Cathie Wood, CEO of ARK Invest, has raised alarms regarding the potential recession risks associated with U.S. President Donald Trump's tariff policies. Wood believes that the White House may be significantly underestimating these dangers, which could push both the president and the Federal Reserve into action towards pro-growth strategies.
Speaking at the Digital Asset Summit held in New York on March 18, Wood pointed out that U.S. Treasury Secretary Scott Bessent appears to be oblivious to the looming threat of a recession. However, she articulated her concerns about a pronounced slowdown in the velocity of money—a critical indicator that usually foreshadows a recession, as it reflects diminished spending and investment activities among consumers and businesses. Wood posited that as GDP declines, the president and the Federal Reserve might find themselves with more leeway to pursue tax cuts and alter monetary policies to stimulate growth.
Investors have been closely watching the Federal Reserve's forthcoming actions, with many anticipating an end to its quantitative tightening program—a move that Polymarket bettors believe will happen before May. Additionally, expectations are rising for several rate cuts from the Fed in the latter half of the year, as indicated by CME Group’s Fed Fund futures prices, which currently show a 65% probability of lower rates by the Fed’s June 18 meeting. Under Wood's stewardship, ARK Invest has established itself as a significant force in the cryptocurrency investment arena.
The firm recently collaborated with 21Shares to launch a spot Bitcoin (BTC) exchange-traded fund (ETF) on January 11, 2024, which has amassed over $3.9 billion in net assets, as reported by Yahoo Finance. Despite facing substantial outflows from spot Bitcoin ETFs, the prevailing trend suggests that investors are holding their ground. In partnership with Eaglebrook Advisors, ARK is also enhancing its offering of crypto portfolio solutions aimed at wealth managers.
Throughout the summit, Wood reiterated her conviction that long-term innovation remains paramount, especially amidst recent market corrections. She underscored that crypto assets continue to represent a viable long-term investment strategy, a cornerstone of ARK’s investment approach. Notably, Wood pointed out that ARK has broadened its portfolio beyond Bitcoin, Ether (ETH), and Solana (SOL), bolstered by regulatory changes that have considerably improved the investment landscape.
These pro-crypto policy developments have prompted institutions to more seriously contemplate crypto assets, with many now acknowledging a fiduciary duty to inform clients about this nascent asset class..