ARK Invest CEO Cathie Wood has raised concerns that the White House is underestimating the economic risks posed by President Donald Trump’s tariff policies. Speaking at the Digital Asset Summit in New York, Wood cautioned that a significant economic slowdown could ultimately push both the Trump administration and the Federal Reserve to adopt pro-growth measures such as tax cuts and monetary easing.
Key Takeaways:
Wood warns of recession risks: She believes a declining velocity of money—which signals lower spending and investment—is a major recession indicator.
Fed rate cut expectations rise: CME Group’s Fed Fund futures indicate a 65% chance of rate cuts by the June 18 Federal Reserve meeting.
Quantitative tightening may end: Polymarket bettors anticipate the Fed will halt its quantitative tightening program before May.
ARK Invest remains bullish on crypto: The firm, which launched a spot Bitcoin ETF in 2024, continues to expand its crypto holdings, citing a favorable regulatory environment.
White House and Fed May Be Forced into Action
Wood expressed skepticism about U.S. Treasury Secretary Scott Bessent’s confidence that a recession is unlikely. She highlighted that a slowdown in the velocity of money—a crucial economic indicator—could indicate weaker consumer and business activity.
According to Wood, a potential recession could force policymakers to reverse course on restrictive economic measures, providing the Trump administration and the Federal Reserve with the flexibility to implement tax cuts and monetary easing to stimulate growth.
Market Eyes Fed Policy Changes
As uncertainty looms over U.S. trade policies, investors are closely watching the Federal Reserve’s next moves:
Fed pivot expected: 65% probability of a rate cut by June, per CME Group’s Fed Fund futures.
Quantitative tightening may end: Polymarket markets predict the Fed will stop tightening before May, increasing liquidity.
ARK Invest Expands Crypto Exposure
Despite recent outflows from spot Bitcoin ETFs, Wood reaffirmed ARK Invest’s long-term commitment to digital assets. The firm, in partnership with 21Shares, launched a spot Bitcoin ETF in January 2024, now managing over $3.9 billion in assets.
Wood emphasized that regulatory shifts have created a stronger investment climate for crypto, encouraging institutional adoption. ARK Invest has since diversified its portfolio beyond Bitcoin (BTC), Ethereum (ETH), and Solana (SOL), as wealth managers and institutions increasingly recognize crypto as a viable investment class.
Cathie Wood’s outlook highlights growing macroeconomic risks amid Trump’s tariff policies and rising recession fears. While the Federal Reserve’s policy response remains uncertain, the crypto market stands to benefit from increased institutional interest and ARK Invest’s expanding crypto strategy, according to Cointelegraph.
