Cathie Wood: The First Institutional Bull Cycle Has Officially Started (What's Changed)

Transcript

Makes a lot of sense. We see a lot of tribalistic nature in in the crypto digital assets industry as well. It's no surprise that in the institutional world, you know, the auto industry wants their auto stocks. They don't like to cross-pollinate ideas or share what they feel is their their insight. Um and so the digital assets story obviously starts with Bitcoin. You know, you started Arc in 2014. Bitcoin was around, but it was still finding its footing. How did you initially approach the idea and what was your reaction to Bitcoin at the time? Was it ready for institutional asset allocation?

>> Uh no, not back then. Uh actually, we started looking at Bitcoin, talking about it at my last firm. Uh and I brought with me to uh Arc uh the lead analyst who was the person most intrigued by Bitcoin. Uh he is now our chief futurist, Brett Winton. And uh I remember talking about it at our last firm, and it was simply a curiosity. Okay, let's see what happens with this. Um in 2014 when uh I founded Arc, uh we actually had instead of five innovation platforms, we had four. We had combined

AI and blockchain technology into something called the next generation internet. And that's actually still the name of ARKW, one of our funds uh focused in those areas. Um and the reason we did that is, you know, we had the deep learning breakthrough uh in AI. So, AI was getting more and more attention, but you know, it was still very fresh, very young. Uh and then blockchain technology uh we were more intrigued, uh but we still didn't know if it deserved uh its own breakout, if you know, people

would even, you know, if their eyes would uh you know, glaze over just uh not in in a lack of interest. So, uh but we were very interested and we wrote our first white paper on Bitcoin in collaboration with Art Laffer in 2015. And we simply were asking the question, could Bitcoin serve the three roles of money? So, means of exchange, store of value, unit of account. And Art Laffer, I'm not sure if you know Laffer curve, he's famous for that in the fiscal policy arena, but he's also a monetary scholar. His His mentor uh was Robert Mundell who won

uh >> [clears throat] >> a Nobel Prize for his monetary theory. And uh so, we put the our thesis in front of Art and from an economic point of view, he helped us tremendously. And I have an economics background, so I began to understand Bitcoin uh in a profound way because he said to me at the time, uh you know, he said, "This is what I've been waiting for since since the US closed the gold window in 1971."

And I said, "Okay, Art, that sounds like a pretty big idea. How big could this idea be?" Uh and he said, "Well, how big is the US monetary base?" And back then, it was four and a half trillion dollars. Today, it's a little over six trillion. Um and Bitcoin was the equivalent, we called it network value at the time, of six billion dollars in market cap. Think about that, six billion. And he was saying trillions. So, I personally invested right away. Um and we looked around for the best way to gain exposure for our clients. And we had to we had to ask permission, New York Stock Exchange,

SEC. You know, we we had to get through some regulatory uh barriers or or bottlenecks. And we found GBTC. Uh GBTC really I think they had to go through a year of seasoning before they could launch it. And uh so that's that's where we started. Uh Bitcoin at that time was $250. Uh we took our first position in the summer of 2015 when Greece was threatening to leave the EU and we noted that wait a minute, whenever there's a headline like that, uh Bitcoin goes up. Hey, this is pretty interesting. It's acting like a hedge.

Uh a hedge against uh disaster. And so uh we thought, "Wow, this could be not only a risk on uh asset, but it could be a risk off. It could serve both roles at different times." So, uh pretty interesting. >> Yeah. [clears throat] And Kathy, I think now looking back at that time, a lot of the kind of common school of thought was this is going to get uh adopted by the world's largest asset managers, institutions. It's going to be, you know, a lot of the rhetoric was like, "Oh, the institutions are going to come and buy Bitcoin from us, right? Like we are, you know, finally in something before kind of the the typical Wall Street Outback here, right?" And like

that was a lot of the rhetoric. And now it's 2026. We are seeing ETFs. We are seeing stablecoin adoption. We are seeing tokenized assets. We are seeing this absolute explosion of permission blockchains, of uh largest uh institutions in the world launching POCs, actual products, stable coins, etc. And really like this the convergence that we spoke about at large in the beginning around all these different sectors, it the main one in digital assets is the institutional adoption kind of collaborating with this crypto culture and all of the products and infrastructure that the industry has built over the last 5 8 years. post Ethereum really. I'm curious what your

current lay of the land is on this adoption from the institutional perspective as it correlates to the kind of interesting sentiment on the ground within the industry. There's a lot of apathy, there's a lot of kind of almost like internal disappointment from the inside, the crypto natives, the people who are supposed to be the believers. Meanwhile, a lot of the kind of more newer adopters from larger sectors, larger firms are more are just frankly more bullish. Right, you being one of them. Why is this happening and kind of what is your read on the state of adoption as this industry has kind of grown up and matured?

>> Well, I think there are a few things going on right now. >> [clears throat] >> And and it was interesting. So, I gave we took our first position in 2015 and we we were really we were made fun of back then. You may or may not have been around and in the industry at that time, but you know, many people thought this was just a a marketing gimmick. And that's when I really knew that wait a minute, we might be on to something big here. When that many people make fun of you or just dismiss, it's and a lot of it was dismissive. That makes [clears throat]

me even more interested in it in a technology. And so, we have a global monetary system that really is Bitcoin. Bitcoin owns that space. DeFi, so so Ethereum, Solana, I think they they are running with that space. Hyperliquid giving them a bit of a challenge as well.