Original title: Why Cathie Wood's ARK Invest Modified Its $1.5M Target | CoinDesk Spotlight
Guest: Cathie Wood, CEO and CIO of ARK Invest
Podcast date: August 12, 2025
Compiled & translated by: LenaXin, ChainCatcher
ChainCatcher editor summary:
This article is compiled from Coindesk and the focus interview podcast with Cathie Wood, CEO and CIO of ARK Invest, where she discusses how the rapid adoption of stablecoins affects her famous prediction of Bitcoin reaching $1.5 million, explores her personal journey into economic research, and her unique investment philosophy, revealing ARK Invest's cryptocurrency asset allocation methodology, transparency strategy operation logic, and regulatory dilemmas.
ChainCatcher has compiled and translated this.
Exciting viewpoints
Excessively high tax rates actually suppress tax revenue growth.
Chairman Powell's disruption of the balance reflects political considerations as his term ends next May, and reveals deeper economic concerns.
If the high-interest-rate environment persists, a substantial decline in housing prices will become the only solution to the housing crisis.
The current US economy is on the brink of transitioning from a 'rolling recession' to an 'unexpected recovery'.
The Ethereum network is becoming the main vehicle for the explosion of stablecoins.
Bitcoin's two core values: the entry point for institutional allocation of digital assets and the digital form of gold.
In a bull market scenario, the target of Bitcoin breaking one million dollars within five years remains valid and may even significantly exceed that.
We are more focused on the potential boundaries of AI, which is the true transformative mainline currently.
From an investment perspective, there is regulatory fragmentation and geopolitical risk in markets like Europe.
I believe AI will soon disrupt traditional quantitative strategies, fully commodifying them.
(1) Cathie's journey so far
CoinDesk: What is the earliest memory that impressed you regarding the market, financial system, and innovation?
Cathie Wood: During college, I had no clear sense of direction for the future, so I tried various possibilities. Engineering, education, geology, astronomy, physics... I truly explored all fields. To be honest, I didn't take economics at that time, partly because my father particularly hoped I would choose this subject. It wasn't until the last semester of my sophomore year at UCLA that I took economics and became completely fascinated.
Upon discovering that UCLA did not offer an undergraduate business program, I immediately transferred to the University of Southern California, where I met the renowned economist Arthur Laffer. It was he who recognized my passion for economics and recommended me to Capital Group, then the largest and most prestigious investment institution in Los Angeles.
When I first joined the company, I knew nothing about the financial world, yet I quickly found the connection between economics and the real world. The feeling of participating in market activities made me fall in love with the investment industry almost immediately. I realized that this job not only pays me to learn but also helps me interpret the logic of how the world operates. When I joined Capital Group at 20, I decided that this would be my lifelong career.
CoinDesk: What ignited your passion for economics?
Cathie Wood: Although I had a close relationship with my father, my rebelliousness during adolescence led me to deliberately avoid the economics he recommended. It wasn't until I encountered Professor Arthur Laffer that I was captivated by his unique teaching style. Each lesson tackled real-world issues, igniting interest with humor, ultimately deriving a board full of formulas. He provided us with a panoramic view of the ideological clashes among economic schools: Harvard's Keynesianism, Chicago's monetarism, and the supply-side economics he advocated.
This diverse perspective has given me a significant advantage in my career. When Wall Street was uniformly Keynesian in the 1980s, I accurately predicted that Reagan's supply-side reforms would spark the longest bull market in history. Even during the economic winter when interest rates soared to 15%, I remained convinced of the truth revealed by the Laffer curve: excessively high tax rates actually suppress tax revenue growth. Later, during my 18 years at Jenison Associates, we often invited our mentor to reinforce this concept. The intellectual foundation laid during those years ultimately allowed me to carve out my own path in the investment world.
(2) Are the rare divergences at the Federal Reserve hinting at economic changes?
CoinDesk: The Federal Reserve just decided to keep interest rates unchanged; what are your insights on the direction of interest rates?
Cathie Wood: Today's Federal Reserve decision is rare with two dissenting votes, marking the first dual dissent since 1993. Chairman Powell has always emphasized decision-making consensus, and now that balance has been disrupted, it may hide deeper meanings. There are political considerations as his term ends next May, reflecting deeper economic concerns.
The two dissenting board members may have sensed signs of persistent weakness in the real estate market and the failure of tariff transmission, indicating that inflation will continue to decline. The employment market shows structural division, with rising unemployment rates among college graduates, reflecting that entry-level positions are being acceleratedly replaced by AI. We have monitored that housing inflation has shown a downward inflection point, but statistical lag conceals the real trend. If the high-interest-rate environment persists, a substantial decline in housing prices will become the only solution to the housing crisis.
The current U.S. economy is on the brink of shifting from a 'rolling recession' to an 'unexpected recovery'. As policy uncertainty fades, productivity leaps will become the biggest highlight in the next 6-9 months. Technological breakthroughs in robotics, energy storage, AI, blockchain, and gene sequencing are creating unprecedented deflationary momentum. This 'creative destruction' will bring about polarization: it will be beneficial deflation for innovators but a deadly shock for incumbents. Current mainstream economists severely underestimate the depth and breadth of this deflationary revolution.
(3) Regulatory loosening + AI revolution, could Ethereum become the core of institutional crypto infrastructure?
CoinDesk: Regarding the outlook for the next 6-9 months, what role do you foresee cryptocurrencies playing in the expected recovery?
Cathie Wood: The regulatory shift is reshaping the innovation landscape. The transition from 'enforcement regulation' during Gensler's era to a friendly framework guided by legislation is accelerating the rise of 'agent AI': in the future, AI assistants will make autonomous decisions and collaborate, requiring smart contracts as a foundational support. When AI agents automatically settle with media platforms, the integrated value of blockchain and AI becomes evident.
As regulations thaw, traditional institutions are making large-scale layouts in blockchain, which can not only compress payment costs from 3.5% to 1% (when global asset management scales reach $250 trillion in five years, a 2% cost saving means a huge efficiency gain), but also give rise to AI-driven micro-payment networks. These innovations form a 'digital infrastructure' that is becoming the core engine of the next productivity revolution, which is the strategic pivot of the crypto economy in the new cycle.
CoinDesk: Do you view Ethereum as the foundational layer for building an efficient AI-driven ecosystem?
Cathie Wood: We continue to track the logic of institutional choices in digital asset protocols. Although Solana has performed more impressively in the market, institutions like Coinbase and Robinhood still choose Ethereum as the Layer 2 foundation. This confirms our judgment that 'Ethereum will become an institutional-grade protocol'. This stems from its security advantages brought by a more decentralized architecture, although its transaction efficiency is not as good as Solana's.
The 'bad income' clause in the 1940 Investment Company Act restricts funds from gaining exposure through ETFs, as losing tax benefits may occur when a single investment's profit share exceeds 10%.
Today, we break this limitation by establishing Ethereum positions, whose value lies not only in asset reserves. As an early investor in Circle, we observed that the Ethereum network is becoming the main vehicle for the explosion of stablecoins, and future staking rewards will further enhance its utility. This stands in stark contrast to MicroStrategy's strategy of simply hoarding Bitcoin.
(4) Long-term bullish on Bitcoin, quantum risks are premature
CoinDesk: Has your stance on Bitcoin changed? I know you previously predicted Bitcoin would reach $1.5 million by 2030. Has this expectation been adjusted?
Cathie Wood: If we discuss the biggest misjudgment of the past decade, it would be that we initially envisioned Bitcoin taking on the role of stablecoins in emerging markets. Tether co-founder Paolo admitted that it was only during the pandemic that he realized Tether had become a revolutionary tool for emerging markets to gain exposure to dollars. Young people began teaching their parents that 'there's no need to go to the black market for currency exchange anymore.'
The explosive adoption of stablecoins has indeed exceeded our expectations, prompting us to potentially adjust emerging market weights in our (2025 grand vision) model. However, the two core value pillars of Bitcoin remain unchanged: one is the entry point for institutional allocation of digital assets, and the other is the digital form of gold.
Based on this, we maintain our original prediction framework. In a bull market scenario, the target of Bitcoin breaking one million dollars within five years remains valid and may even significantly exceed that.
CoinDesk: As an investor known for foreseeing technological transformations, how do you view the potential threat of quantum computing to Bitcoin's security?
Cathie Wood: We established the position of Chief Futurist, specifically to study these existential issues. Former research director Brett and on-chain analysis authority David Puell continue to monitor relevant progress; currently, quantum computing is still in a phase of quantitative change.
Brett predicts that quantum threats may first manifest in the late 2030s, as the evolution of AI has far outpaced expectations, even surpassing the imagination of long-term observers like us. Many problems originally planned to rely on quantum computing will be tackled first by AI.
The exponential progress in AI training costs decreasing by 75% annually and inference costs decreasing by 85-98% is continuously breaking performance ceilings. This computationally driven technological paradigm is reshaping investment directions, and we are more focused on the potential boundaries of AI, which is the true transformative mainline currently.
(5) ARK Invest's cryptocurrency allocation methodology
CoinDesk: Aside from Bitcoin, which protocols or projects currently deserve attention?
Cathie Wood: We currently have formed a core allocation matrix of 'Bitcoin + Ethereum + Solana' (although we previously held a significant position in Solana, we have adjusted our position based on market dynamics), while continuously monitoring the development of Layer 2.
We are preparing specialized reports for traditional financial practitioners, using quantitative tools like the Sharpe ratio to analyze the return-risk characteristics of digital assets. Drawing from the model of (Bitcoin Monthly), we will regularly publish analyses of on-chain data for Ethereum, Solana, and others. These blockchain-specific transparency indicators are establishing new evaluation dimensions that traditional markets lack. As more protocols mature, our research landscape will continue to expand.
CoinDesk: You just listed three major cryptocurrency ecosystems. Are there also three cryptocurrency stocks that you're optimistic about?
Cathie Wood: In our core investment portfolio (ARKK, ARKF, ARKW), Coinbase, Circle, and Robinhood form a strategic triangle. Although Robinhood is a hybrid asset, a review of quarterly meeting records from three years ago shows all our inquiries focused on its crypto business layout: 'User demand is clear, where is your strategy?' Due to their hesitation at that time, we reduced our holdings. Today, the matrix of crypto products displayed by their analysts confirms their determination to transform.
Although MicroStrategy is a benchmark company for Bitcoin, it does not rank in the top three. We place greater emphasis on the diversified value of ecosystem benchmarks like Coinbase. As Ethereum gains institutional recognition, emerging benchmarks like Bitmine Immersions are also beginning to enter our strategic observation list, reflecting our 'base protocol + application ecosystem' layout logic.
(6) ARK's three major battles: regulation, transparency, and AI challenges
CoinDesk: What 'survival-level issues' keep you up at night?
Cathie Wood: What truly keeps us up at night is the disastrous regulatory trajectory in the U.S. over the past four years. We are even starting to seriously consider shifting more research overseas. Especially in the blockchain field, America's innovative vitality is being stifled. It's important to understand that blockchain represents the next generation of internet revolution, just as the internet once allowed the U.S. to lead the tech revolution; we are now actively abandoning this larger technological iteration.
From an investment perspective, there is regulatory fragmentation and geopolitical risk in markets like Europe. We once publicly stated during a live broadcast that SEC Chairman Gensler is a 'threat to innovation', and only realized afterward that we are indeed a SEC-regulated entity. This statement certainly poses commercial risks, but when it threatens the foundations of US tech companies, we must speak out.
CoinDesk: Why did you choose to publicly share trading information on social media? What strategic significance does this transparency strategy have for your business?
Cathie Wood: After the 2008 financial crisis, we observed a trend where mutual funds were being replaced by ETFs. As active investors, I had the idea of packaging active strategies within an ETF framework. This innovation not only reduced investment costs by making ETF fees more transparent but also responded to the market's demand for transparency in the post-crisis era.
While industry peers either shifted to passive investing or chased the 'Big Six' in US stocks, resulting in homogenized investments, we focused on laying out innovative fields. Although this strategy was overlooked during the tech stock bull market from 2021 to 2024, this year's market spread has validated our judgment.
The practice of sharing research reports and public trading records for free during the pandemic unexpectedly sparked viral spread in Asia, shaping a global brand. Based on my economic background, I predicted back in March 2020 that massive stimulus policies combined with a 27% surge in savings rates would lead to economic overheating. This judgment ultimately proved correct, but the subsequent interest rate hike storm severely impacted non-major innovative companies.
CoinDesk: Have you ever worried that AI might surpass ARK's investment capabilities?
Cathie Wood: Currently, the easiest breakthroughs for AI are in the areas of passive investing and benchmark-sensitive strategies. This is also the field many investors have turned to during the dominance of the 'Big Six' in US stocks. In contrast, I am more wary of the risks associated with benchmark-sensitive strategies or quantitative strategies, particularly those relying on factor analysis in quantitative models (such as growth, cash flow quality, volatility, profitability, and other traditional indicators).
When quantitative analysts study our strategies, they find a large number of 'residuals' that cannot be explained by existing factors. This is precisely because the future will not simply repeat the past, and we invest in the future. Quantitative models are essentially based on historical data retrospectives, which is where our advantage lies.
I believe AI will soon disrupt traditional quantitative strategies, fully commodifying them. However, our strategy relies on original research, which can be fed into large language models like OpenAI, Grok, etc. While AI can recognize certain patterns, this will actually enhance our research efficiency. For instance, AI will significantly reduce our burdens in time-consuming research, like our core 'Lett Law' analysis work.
(Note: The Lett Law is a sister law to Moore's Law, stating that for every doubling of output, costs decrease by a fixed proportion.)
But I never underestimate the value of human wisdom, especially the creativity of our research team. The synergy between AI and human researchers will elevate our investment capabilities to new heights.
(7) Conversation with 'Little Cathie'
CoinDesk: If you could go back in time and talk to your 20-year-old self who was trying various possibilities, what would you tell her?
Cathie Wood: I would appreciate her open-mindedness. That exploratory period was indeed enjoyable; college is the best time to try out various possibilities.
Diving into a field I love brings enduring satisfaction. The seeds of innovation I planted in the first twenty years of my career are now blossoming.
Looking back at the internet bubble of the late 1990s, the quadrupling of IPOs on the first day highlighted market frenzy. Take gene sequencing as an example, where the cost was as high as $2.7 billion in 2003, but now it only costs $200. The contrast between technological maturity and market performance precisely confirms collective irrationality.
The current market is showing a healthy trend; amidst a generally cautious atmosphere, cutting-edge fields like AI healthcare are steadily developing. Meanwhile, investment opportunities are spreading from tech giants to emerging assets like blockchain, which fully aligns with expectations.
