Original title: Why Cathie Wood's ARK Invest Modified Its $1.5M Target | CoinDesk Spotlight.
Original source: CoinDesk
• Host: Jennife Sanasie.
• Guest: Cathie Wood, Founder, CEO, and Chief Investment Officer of ARK Invest.
• Airing time: 2025.8.15
Foreword.
In the field of digital assets and innovative finance, market changes often exceed expectations. Cathie Wood is surprised by the rapid adoption of stablecoins and points out in her optimistic forecast that even with the most cautious adjustments, the potential for the next five years still far exceeds expectations. As she describes in (Big Ideas 2025), investing in emerging markets and frontier technologies is not only full of opportunities but also requires investors to have foresight and keen insight. Through this interview, we will delve into Cathie's investment philosophy, market observations, and how she seizes innovative opportunities in a turbulent financial environment.
One, the journey: Cathie's investment path.
We are very surprised by the speed of adoption of stablecoins. If we were to adjust the $1.5 million forecast at all, you might see that you can check out (Big Ideas 2025) to see how we constructed this optimistic scenario, and we may slightly take out some expectations from the emerging market portion. I believe we can confidently say that in five years, our optimistic scenario will be well beyond one million, far exceeding one million dollars." - Cathie Wood
Jen: Cathy Wood, welcome to CoinDesk Spotlight.
Cathie Wood: Thank you, Jen, I’m glad to be here.
Jen: We are also very happy to have you. Let’s start from here: looking back, when did you first develop an interest in the market, the financial system, and the importance of innovation?
Cathie Wood: Oh my gosh... I actually had no idea what I wanted to do in college, so I tried almost everything: engineering, education, geology, astronomy, physics... I tried them all.
Jen: You really are exploring all areas.
Cathie Wood: Yes, really. The reason I didn't take economics classes was, to be honest, because my father always hoped I would study economics, so I deliberately put it off until the last minute. It wasn’t until my last semester of sophomore year at UCLA that I finally chose my first economics course, and I fell in love with it as soon as I started. At that time, I also found out that UCLA wouldn't let me take more business courses because they only had a graduate business school... So I transferred to USC, where I met Art Laffer.
Perhaps there are a lot of details, but that's okay. Art Laffer is a famous economist and the proposer of the 'Laffer Curve.' He saw my passion for economics and introduced me to Capital Group, which was the largest and possibly the most prestigious investment company in Los Angeles at the time.
When I first walked into the company, I knew almost nothing about how the financial world operated. But there, I felt for the first time that economics could be closely integrated with these exciting market activities. More importantly, I realized: 'Wait a minute, our job is to keep learning, and we even get paid for it? That's amazing! We can even use our understanding to deduce how the world operates.'
I started my career at Capital Group when I was 20 years old, and from that moment on, I knew I would spend my whole life in this industry.
Two, meeting Art Laffer and falling in love with economics.
Jen: What ignited your passion for economics? After all, you tried almost every major and even had small disagreements with your father.
Cathie Wood: Yeah, a bit. But my father-daughter relationship has always been good; this 'rebellion' is more of a normal teenage defiance. What really drew me to economics was Art Laffer’s charismatic teaching style.
After I transferred to USC, he would start each class with a joke, bringing us into the classroom atmosphere, and then he would put that day's topic into the context of the real world, explaining 'why we need to learn this?'. By the time the class was nearing its end, you would find the blackboard filled with formulas.
He always guided us in a very vivid way while exposing us to different schools of economic thought: Harvard's Keynesianism and the Chicago School's monetarism. What he promoted at USC was the supply-side perspective, which was even somewhat closer to the Austrian School. He wanted us to not only learn the theories but also understand the differences between these frameworks.
This multi-perspective training was crucial for my entry into the investment industry. In the late 1970s, almost everyone was a Keynesian, even monetarists were considered a 'minority.' Later, I witnessed the shift in global economic thought toward supply-side economics during the Reagan administration. It was precisely because of my studies at USC that I was well-prepared for the most remarkable bull market of the 1980s and 1990s.
However, when I first started working in New York, I wasn't able to openly discuss Laffer's views. The core assertion of supply-side economics—that 'when tax rates are too high, tax cuts can actually increase tax revenue'—was hard to convince people in the context of the early 1980s recession. At that time, the Federal Reserve raised interest rates above 15%, and mortgage rates even broke 20%, plunging the economy into a deep recession. In that environment, I only had the opportunity to express these views more candidly a few years later.
Three, regarding Federal Reserve interest rates, economic outlook, real estate, and innovation.
Jen: After hearing you share these experiences and how you cope with them, I want to bring the topic back to the present. Today, as we record this program, the Federal Reserve has just announced that it will keep interest rates unchanged. I'm curious, how do you view the future trend of interest rates?
Cathie Wood: I think today's voting results are quite interesting, with two committee members voting against. This situation hasn’t occurred since 1993, and I remember it clearly because I was also in the industry at that time. This is symbolically significant, as Chairman Powell has always hoped for unanimous votes, and this time there was a divergence.
Part of the reason may be that Powell's term will end in May next year; perhaps these two committee members are 'competing' for that position? Who knows. It could also be because they have noticed some changes. I haven't finished reading all the meeting minutes yet, but I've already seen that the real estate market is clearly retreating, with many regions' housing prices showing almost no response to rising tariffs. They might be thinking, 'Wait a minute, perhaps the biggest surprise in the next six months will be a significant drop in inflation.'
Recent employment data is somewhat 'good news for all'; some indicators are strong, while others are weak. However, I noticed that the unemployment rate for recent college graduates is rising because many entry-level positions are being automated, especially by AI.
We have always believed that the U.S. economy is currently in a 'rotating recession,' with the Federal Reserve raising interest rates 22 times over the past year, crushing one industry after another, starting with real estate. By many standards, real estate is still 35% lower than its peak, and many indicators are again showing significant declines.
I expect that housing-related inflation will continue to decline. Various monthly data sources are already showing year-on-year declines, although we haven't seen a comprehensive rollback outside of the median price of used homes. But if sellers really want to sell their houses, and interest rates do not drop, they can only lower their prices. Once prices drop, the biggest surprise in the second half of this year could be that inflation falls very low.
It is important to note that the transmission of falling housing prices into the statistics and then their eventual 'disappearance' from the data has a long lag period, so this impact will persist for a while.
We believe that as uncertainties surrounding tariffs, taxes, government spending, and regulations gradually dissipate, the U.S. economy is transitioning from a 'rotating recession' to a recovery stronger than expected. This will be reflected in productivity gains in the next 6 to 9 months. Although the overall economic growth rate is slow, productivity has already exceeded 2% year-on-year, and I believe it will be even higher because the technologies we focus on—robotics, energy storage, AI (especially important), blockchain, and multi-sequencing—have immense potential for productivity enhancement.
These innovations are mostly deflationary in nature, with AI being the most typical example. The cost of training AI decreases by 75% each year, and the cost of inference—i.e., the cost of inputting questions and receiving answers in ChatGPT or Grok (I now use Grok more often)—decreases by 85% to 98% each year (with data from China even reaching 98%). The decline in costs will significantly drive usage growth.
So we believe this is 'benign deflation,' unlike the 'bad deflation' of 2008-2009. This is beneficial for companies at the technological frontier; for companies being disrupted, it presents pressure as they will have to lower prices. We believe the future will enter a more deflationary landscape than most economists and strategists expect.
Four, how the new regulatory environment drives Agentic AI and blockchain innovation.
Jen: You just mentioned a 6-9 month outlook; in your vision of a strong recovery, what role would cryptocurrencies play?
Cathie Wood: The shift in the regulatory environment is crucial. We just experienced a hostile regulatory period dominated by SEC Chairman Gary Gensler, transitioning to a legislative-led and extremely friendly situation now. It is now about guiding regulation with a legal framework rather than suppressing innovation with 'enforcement-style regulation.' The past approach forced many innovative projects to leave the U.S. and go to other countries.
The situation is rapidly improving, especially with David Sacks being appointed to oversee both crypto and AI matters, and the concept of 'Agentic AI' has emerged. Agentic AI refers to AI agents capable of autonomously completing specific tasks such as walking, working, and communicating. Of course, their capabilities have certain boundaries. To enable these AIs to operate efficiently, smart contracts are central, as AI agents need to interact with websites, such as purchasing certain content or services on CoinDesk, which requires automated smart contracts for execution. This is precisely where AI intersects with blockchain technology.
Before this, we had already seen similar revolutions in the financial services sector. After the regulatory green light, more and more financial institutions entered the blockchain space because they found it could significantly reduce costs.
I like to compare this situation to the early days of the internet in the late 1980s and early 1990s. At that time, the developers building the internet hardly thought that financial services or commerce would move online, so there was no native payment layer. It wasn't until today that we truly have that layer thanks to blockchain. Over the past 30-40 years, due to the lack of a payment infrastructure, traditional finance had to rely heavily on intermediaries to reduce risks after credit cards went online, resulting in 2%-3.5% fees being taken from each transaction, which almost became a 'systemic tax'.
Blockchain can reduce this 'tax' from 3.5% to about 1% (in Nigeria, it can even drop from 20% to nearly 1%). We estimate that the global financial services assets under management will reach $250 trillion in five years. If you can reduce costs by 2-2.5 percentage points in such a large market, that would be a disruptive improvement in friction and efficiency.
Cost is just one aspect. In terms of productivity, Agentic AI + smart contracts + API-to-API automated trading (including micro-trading) will also have similarly profound effects.
Five, the logic of Ethereum, Agentic AI, and ARK's investment in Bitmine.
Jen: You previously placed a bet on Tom Lee's Bitmine, and ARK is also one of the largest institutional holders of Ethereum (ETH). Is this related to the Agentic AI and smart contracts you just mentioned? Do you think Ethereum will become the foundational layer supporting an efficient Agentic AI world?
Cathie Wood: Yes, we have been closely observing which protocols institutions choose to access when formulating their digital asset strategies. First, Coinbase chose Ethereum for its Layer 2 network, Base, and recently, Robinhood's Layer 2 is also being built on Ethereum. We had long hypothesized that Ethereum would become the institutional-level protocol. Although Solana significantly outperformed Ethereum for a while, leading many to question our judgment, from the voting (actual deployment) perspective, Ethereum, despite its higher transaction costs and slower speed, is safer due to its greater decentralization; Solana, on the other hand, is more likely to excel in consumer-facing applications.
As for investing in Bitmine, this is actually our first opportunity to gain stable exposure to Ethereum within an ETF. Directly buying into other funds or ETFs has many issues, including tax (such as 'bad income' clauses; if a certain type of gross profit exceeds 10% of the fund's annual profit, it may lose tax incentives or even be forced to shut down) and layered fees. We cannot afford such risks, so we have never found a suitable path. Bitmine provides a solution, and although there is a premium, the utility of the Ethereum treasury is greater than that of Bitcoin's treasury, such as staking, which ETFs currently cannot offer.
In addition, we are also cornerstone investors in Circle, continuously observing the explosive growth of stablecoins, most of which are happening on Ethereum. These factors combined have given us more confidence in Ethereum’s potential as the foundational layer for Agentic AI and also explain our investment logic in Bitmine.
Six, the case for Bitcoin breaking through $1 million.
Jen: Will this change your view on Bitcoin? I know you forecast that Bitcoin will rise to $1.5 million by 2030; is that forecast subject to adjustment?
Cathie Wood: If you ask me what my biggest surprise over the past decade is, it’s that we founded ARK in 2014 and published the first Bitcoin white paper in 2015. At that time, we believed that Bitcoin would play the role that stablecoins do today in emerging markets. The story of Tether was completely unexpected. Co-founder Paolo told me that they only realized during the pandemic that Tether would become an important way for emerging markets to gain exposure to the dollar. At that time, kids would tell their parents: 'We don’t need to go to the black market to exchange dollars today; we can do it directly online.' This was the opportunity for its widespread adoption.
We didn't expect stablecoins to replace Bitcoin's role in this area so quickly. If we were to adjust the $1.5 million forecast, we might slightly lower the contribution from emerging markets. But the bigger drivers still come from two points: first, Bitcoin is becoming the main entry point for institutions into the digital asset market; second, Bitcoin is replacing gold as a store of value. These two logics have never changed, so we still believe that Bitcoin will break through $1 million in five years, and it may even far exceed that number.
Seven, Cathie's Top 3 crypto assets and crypto-related stocks.
Jen: Talk about your focus areas beyond Bitcoin. As innovations continuously emerge in the crypto asset space, it seems your vision has expanded beyond Bitcoin, and even your price expectations for 2030 have been adjusted. From your perspective, which blockchain protocols or projects are currently the most worthy of attention?
Cathie Wood: We mainly invest in the public market while also taking on the responsibility of educating investors, just like CoinDesk's role, so we carefully guide clients into the crypto ecosystem. Currently, our core holdings are Bitcoin (BTC) and Ethereum (ETH). In private equity, we had previously been relatively overweight in Solana (SOL), but recently, as Ethereum's performance surpassed Solana's, we adjusted the weights in a timely manner.
These three (BTC, ETH, SOL) are currently our 'top three.' We are also paying attention to layer 2 networks. From the perspective of educating investors, we will analyze these three major assets in depth using language familiar to the investment circle, such as return-risk ratio, Sharpe ratio, Sortino ratio, etc. Related research papers are already in preparation.
In addition, we will borrow from the model of the 'Bitcoin Monthly,' which may become a bimonthly publication in the future, alternating between analyses of Ethereum, Solana, and other potential protocols, especially showcasing their signal characteristics through on-chain data analytics. This kind of transparency is not present in the stock or bond markets, which is especially valuable for institutional investors.
Jen: You just listed your top three crypto ecosystems. So, do you have a similar 'top three' list for publicly listed companies related to crypto?
Cathie Wood: In our flagship fund ARKK, fintech fund ARKF, and next-generation internet fund ARKW (which covers crypto and AI themes), Coinbase, Circle, and Robinhood consistently rank in the top ten. While Robinhood is not purely a crypto company, we have been repeatedly inquiring about their crypto strategy during quarterly communications for the past three years. At that time, they had scaled back, and we had also reduced our focus. But now, they are fully entering the crypto space; if you've seen their Analyst Day or new product launches, you'll find that their goal is to win at all costs.
Eight, why MSTR is not in the top three.
Jen: So, MicroStrategy isn't on your top three list?
Cathie Wood: MicroStrategy is indeed a bet on Bitcoin, as it is the largest asset in this field. But Coinbase is also largely driven by Bitcoin's trends and can cover a broader crypto market. Additionally, although Bitmine did not make it into the top ten, as Ethereum gains popularity among institutions, we believe its strategic position is also on the rise.
Nine, will quantum computing threaten Bitcoin?
Jen: Cathie, I would love to hear your thoughts because you are known for 'betting on the future,' and you have the ability to discern trends and make bold decisions on new technologies. We previously discussed that many people are thinking about their positioning in the future world. In the Bitcoin space, there is a notion that quantum computing may threaten Bitcoin's security. Since you are here today, I particularly want to know, do you think quantum computing really poses a threat to the Bitcoin ecosystem?
Cathie Wood: Of course, this is a question we often discuss. In fact, the reason we promoted our former research director to Chief Futurist is that these long-term survival issues are very important. He and our team, especially David Puell from the crypto team (many well-known indicators in the on-chain analysis field are named after him), are very focused on this. Brett (Chief Futurist) and David have been evaluating the breakthroughs we hear about in quantum computing. There have indeed been some advancements, but more are incremental, and a true technological leap is still a long way off. We judge that if quantum computing really poses a threat to Bitcoin, it may not occur until the late 2030s or even the 2040s.
One reason is that the pace of AI development is far exceeding expectations, even surpassing our imagination before founding ARK. Many tasks that we originally anticipated would be completed by quantum computing are now likely to be achieved first by AI. Moreover, AI's performance has not shown any so-called 'ceiling' effect; on the contrary, the more computational power is invested, the faster the performance improves. This means that a lot of capital that might have flowed into quantum computing will continue to concentrate in the AI field in the short term, and we also want to see how far AI can go.
Ten, the threat of innovation.
Jen: You mentioned that your team discusses these survival issues concerning the future repeatedly when formulating investment arguments. What are some that keep you up at night?
Cathie Wood: In recent years, what we were most concerned about was the poor direction of U.S. regulation. Over the past four years, we even seriously considered turning more overseas for new ideas, especially in the blockchain space, because the innovative environment in the U.S. is being thoroughly stifled. It is important to know that blockchain is the next-generation internet, and the rise of the previous generation of the internet allowed the U.S. to lead the global tech revolution. If we miss this opportunity, the U.S. is likely to hand over the next wave of bigger technological trends to others.
From an investment perspective, the pattern in other regions of the world is more fragmented, and going to Europe also faces the dual regulatory hurdles of the EU and its member states, along with geopolitical risks. Therefore, for us, this is a tangible threat. I remember during a live broadcast or online seminar, I candidly stated: 'Chairman Gensler is a menace to innovation.' Only after saying it did I realize that we are a SEC-regulated institution; would this land us in trouble later? After all, there were indeed some retaliatory regulatory actions during that period. But we still decided we had to speak out because this is not just about us; it concerns the future of all U.S. tech companies, even if it entails risk.
Jen: Has the SEC ever come after you for your comments?
Cathie Wood: No, we haven’t received any direct feedback. Of course, like all investment institutions, the SEC regularly audits us. In particular, our operations are very transparent; for example, we were the first institution to publish research for free on social media, publicly share trading records every day, and maintain a high level of openness about our portfolios. Mutual funds don’t do this, as it brings more scrutiny from the SEC. But we've known for a long time that we would be frequently examined, so we have to be impeccable in compliance.
Our Chief Compliance Officer served as an examiner at the SEC for four years, and we have always held ourselves to that standard. I am not sure if the SEC thus feels more at ease with us, as they never explicitly tell you whether the examination is over or if everything is normal; if there is no response, that is considered good news. But I believe we have undergone enough comprehensive or partial examinations, and they also know that we are 'more saintly than saints' in terms of compliance.
Eleven, why ARK and Cathie maintain high transparency on social media.
Jen: Cathie, you share a substantial amount of information on social media, including trading records, and it's publicly accessible, which is completely different from many competitors. Why is transparency so important to you that it has even become a core part of your operation?
Cathie Wood: After the 2008-2009 financial crisis, we began to observe the changing trends in financial markets. At that time in a brainstorming session at my previous company, we noticed a phenomenon: mutual funds were losing market share, gradually being replaced by ETFs. At that time, I didn't even know much about ETFs because they almost only existed in passive investment, not in our active management field. We are active investors who trade daily, while passive investors may only adjust their portfolios once a quarter or even once every six months.
When I truly understood the mechanism of ETFs, I immediately thought: 'Why can't we put actively managed funds into the ETF structure?' So I voluntarily pushed this project at my previous company, just as they had already obtained the SEC's exemption. At that time, I realized two things: first, this would disrupt mutual funds because ETFs are cheaper; second, ETFs are more transparent in every way. The crises of 2008 and 2009 caused investors to lose trust in the financial system; they wanted to stay in sync with fund managers, and we were able to meet that demand.
Nowadays, many asset management companies are either completely shifting to passive management or becoming 'highly benchmark-sensitive', resulting in almost identical holdings across the board, such as heavy positions in a few large tech stocks (Mag 6). We are not like that; our goal is to provide investors with exposure to future-oriented operational methods. In technological transformations, some giants will be disrupted, while others will adapt, but we will reserve the largest positions for the 'pure disruptors'.
From 2021 to early 2024, although the market experienced a bull market, the gains were concentrated in a few stocks, especially the Mag 6; we said this is not a healthy bull market. A healthy bull market will spread to more companies, which is precisely what began to happen this year.
Returning to your question, the reason we adhere to this model is that transparency is the real demand in the market. In 2020, we did not expect this practice to have such a significant impact. The pandemic lockdown kept global investors at home, and they had no choice but to invest online. By publicly sharing research and trading records daily, we found that countless videos interpreting our trades appeared on YouTube, especially in Asia, which unexpectedly helped us grow into a global brand.
At the beginning of the pandemic, my background in economics allowed me to quickly form a clear judgment: massive monetary and fiscal stimulus, skyrocketing savings rates (peaking at 27%, now only 4-5%), combined with supply chain disruptions, is the recipe for economic prosperity and volatility. The result was indeed as expected; supply constraints, rising inflation, and aggressive interest rate hikes by the Federal Reserve put immense pressure on innovative companies that do not belong to Mag 6. But in any case, our openness and transparency allowed investors to understand our logic and walk alongside us.
Twelve, will AI surpass ARK?
Jen: We are short on time, and I have two more questions. Returning to those future-related thoughts, given your extensive research on AI, do you worry that AI might one day surpass ARK in investment?
Cathie Wood: I see this from two aspects. The easiest strategies for AI to replace are passive investment and 'benchmark-sensitive' strategies, as these strategies have become highly standardized, and many investors are following safe bets like Mag 6. Quantitative strategies (Quant) slice the market based on historical factor analyses such as growth, quality, volatility, profitability, etc., but our strategies have a large portion marked as 'Residual (unexplainable)' in their models because the future will not resemble the past, while quantitative strategies are based on the past.
So I believe that quantitative strategies will be completely commoditized by AI. Our strategies rely on original research, and we even actively share our research results with AI, such as OpenAI and Grok, allowing them to assist us in pattern recognition and efficiency enhancement, especially in applying Wright's Law. Wright's Law is similar to Moore's Law, but it predicts the cost reduction pattern based on output rather than time. We use it to forecast technology's cost curves; this process is very time-consuming, but AI can significantly accelerate such work. AI will be a powerful tool, but I won't underestimate the creativity of human research teams.
Thirteen, Cathie's advice to her younger self.
Jen: I want to end the interview with a question that echoes the beginning: If you could go back to your 20-year-old self, what would you say?
Cathie Wood: I would say: well done, keep an open mind, don’t panic. If you are still unsure of your future direction in college, try out anything that interests you. I have found that whether it’s myself or colleagues who joined our company, if you immerse yourself in a field you love and are willing to learn about, life can be very enjoyable, though not completely without pressure, but overall it is worthwhile.
I am very passionate about my current job. Everything happening today in the innovation space has sown seeds during the first 20 years of my career, and I am fortunate to witness them sprouting and growing. In the late 1990s, capital flooded into the internet, biotechnology, and other fields, and we knew that the technology was not ready for scaling at that time; costs were too high. For example, the first human genome sequencing completed in 2003 cost $2.7 billion, while today it costs only $200. Yet, now, this most promising sector is performing the worst in the market, reflecting investor sentiment. When making money is easy, it is often a bubble; when everyone is worried about everything and neglecting the most important opportunities, it is often the beginning of a healthy bull market.
Moreover, this bull market is spreading to more areas, and we are excited that blockchain is among them, allowing the traditional financial system to engage more with this new asset class, which is really important.
