‘We are worried about a recession,’ but theres a silver lining — Cathie Wood

Despite recent volatility in crypto and traditional markets, “long-term innovation wins,” Wood said as she doubled down on ARKs long-term bets.

ARK Invest CEO Cathie Wood believes the White House is underestimating the recession risk facing the US economy stemming from US President Donald Trumps tariff policies — an oversight that will eventually force the president and Federal Reserve to enact pro-growth policies.

Speaking virtually at the Digital Asset Summit in New York on March 18, Wood said US Treasury Secretary Scott Bessent isnt worried about a recession.

However, Wood said, “We are worried about a recession,” adding, “We think the velocity of money is slowing down dramatically.”

Cathie Wood speaks virtually at the Digital Asset Summit. Source: Cointelegraph

A slowdown in the velocity of money means capital is changing hands less frequently, which is typically associated with a recession, as consumers and businesses spend and invest less money.

“I think whats happening, though, is that if we do have a recession, declining GDP, that this is going to give the president and the Fed many more degrees of freedom to do what they want in terms of tax cuts and monetary policy,” said Wood.

Investors believe the first domino could fall in the coming months when the Fed puts an end to its quantitative tightening program — something bettors on Polymarket believe is 100% certain to happen before May.

Meanwhile, expectations for multiple rate cuts by the Fed in the second half of the year are growing, according to CME Groups Fed Fund futures prices.

The probability of rates being lower than they are now by the Feds June 18 meeting is nearly 65%. Source: CME Group

Related: As Trump tanks Bitcoin, PMI offers a roadmap of what comes next

Focus remains long term

ARK and Cathie Wood have been active cryptocurrency investors for many years. ARK and 21Shares spot Bitcoin (BTC) exchange-traded fund (ETF) was approved on Jan. 11, 2024, and currently has more than $3.9 billion in net assets, according to Yahoo Finance data.

Spot Bitcoin ETFs have recorded heavy outflows in recent weeks, but the overall trend shows investors are holding their positions. Source: Farside

ARK also offers crypto portfolio solutions to wealth managers through its partnership with Eaglebrook Advisors.

Wood told the New York Digital Asset Summit that “long-term innovation wins as we go through these trials and tribulations,” referring to the recent market correction.

When asked if crypto assets remain an “investable arc” over the long term, Wood said this strategy was the cornerstone of ARKs investment approach.

“[W]eve built out positions in more than just the big three,” she said, referring to Bitcoin, Ether (ETH) and Solana (SOL).

This long-term arc is being supported by favorable regulations, which have improved the investment landscape dramatically.

Pro-crypto policy changes are “giving institutions the green light, and if you look at our studies as long ago as 2016, we wrote a paper called ‘Bitcoin: Ringing the Bell for a New Asset Class,’ and, yet many institutions just dismissed it out of hand,” said Wood.

Now, institutions are looking at ARKs studies and saying they “have a fiduciary responsibility to expose [their] clients to a new asset class.”