Cathie Wood Feels ‘Much Better’ About Crypto, Thinks Fed ‘Panicized’

High-profile fund manager Cathie Wood said she “feels a lot better” about the crypto sector after the asset class’ crash in the first half of 2022, which has Bitcoin (BTC-USD) trading below $20K and Ethereum (ETH-USD) hovering around $1.1K.

The founder and CEO of ARK Invest also claimed that the Federal Reserve has “panicized” by raising interest rates as aggressively as it has, arguing that policymakers are more concerned with its historical reputation than the economy. .

talking about her On the Know podcast Over the weekend, Wood said indicators within the inflation data suggest “the Fed is making a big mistake” and “there’s already a lot of deflation in the economy.”

Looking at the current crypto market, Wood described his position as “neutral to positive” in the short term, with his sentiment buoyed by the lack of “another sign of stress in recent days.” However, he added that “we are waiting for some more signs of capitulation.”

The ARKK Invest founder argued that “transparency” in the crypto ecosystem has exposed broader overreach by many hedge fund managers, who borrowed money at low rates in previous years to boost their returns.

“It’s like, okay, the crypto market has alerted us that this yield range went too far and there’s too much glut, too much leverage around it,” he said.

Wood pointed to “hedge funds leveraging 10 to one when returns are 2% so they can hit their return targets” as the least obvious part of the financial system that, like crypto investors, engaged in a fight over performance over the last few years.

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“Maybe there are some issues out there, and we’ll find out,” the ARK Invest CEO added.

Like the crypto market, Wood has seen his family of innovation-focused funds lose significant ground in 2022. His flagship ARK Innovation ETF (NYSERCA:ARKK) has fallen almost 55% so far in 2022.

Elsewhere, Wood’s ARK Next Generation Internet ETF (ARKW) and ARK Fintech Innovation ETF (ARKF) are down more than 50% year-to-date. ARK Genomic Revolution ETF (ARKG) is down about 45%, ARK Autonomous Technology & Robotics ETF (ARKQ) is down about 36%, and ARK Space Exploration & Innovation ETF (ARKX) is down nearly 30%.

For more on Wood’s views on the market, see why he acknowledged he misjudged the short-term inflation situation, but still sees deflation on the long-term horizon.

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