‘Wall of worry’ led to digital wallets, blockchain technology ignored: Cathie Wood
ARK Invest CEO Cathie Wood believes that digital wallets and blockchain technology were among the “game-changing innovations” that equity markets largely ignored in 2022.
In a Jan. 12 blog post on the ARK Invest website, Wood suggested that the stock market faced a “wall of worry” in 2022, caused by fears of entrenched inflation and higher interest rates, largely ignoring some innovative technologies.
Wood highlighted that digital wallets are “replacing cash and credit cards”, noting that they overtook cash as the top transaction method for offline commerce in 2020.
Wood further argued that digital wallets should not be overlooked, noting that they also accounted for approximately 50% of global online commerce by 2021.
After the toughest year ever in the stock market for innovation-based strategies, we just sent this letter to our clients highlighting the cutting-edge technologies that are already transforming the world. In our view, innovation solves problems! https://t.co/YdBiIZhY0D
— Cathie Wood (@CathieDWood) 13 January 2023
Wood suggested that the recent collapse of crypto exchange FTX has not affected the larger mission of what public blockchains were intended for. She noted:
“Public blockchains like Bitcoin and Ethereum haven’t skipped a beat in processing transactions.”
Highlighting how the FTX collapse educated crypto investors to be more diligent about where they store crypto assets, Wood said the share of trading volume on decentralized exchanges, which allow trading without a central intermediary, rose 37%, jumping from 8.35% to 11 .4%.
Wood said that in her “30 years of portfolio management” she has never experienced such volatile market conditions and said she has never seen “markets that are so out of whack.”
The CEO suggested that the economy faces a challenging situation, with a decline in the money supply, a decline in commodity prices and the “winding down” of bloated inventories, indicating a decline in inflation and possibly even deflation.
Related: Visa has plans to let you automatically pay bills from your crypto wallet
Wood noted in the report that fear is high among investors saying investors are holding “high levels” of cash not seen since the 9/11 crisis in 2001.
Other “game-changing” innovations that Wood believed the stock market “largely ignored” in 2022 included artificial intelligence, electric vehicles, space exploration and 3D printing.
She believes that despite the uncertainty in the market, disruptive innovation technologies that “solve problems” have historically “gained share in turbulent times.”
