In an Ark Invest program, Cathie Wood shared her views on the recent resurgence of AI bubble rhetoric and investor panic regarding Bitcoin. She advised investors to identify investment value based on technological maturity, asset pricing, and macro liquidity. The following is a summary of the video's points, analyzing Cathie Wood's perspectives on artificial intelligence, crypto assets, and the current state of the overall financial environment.
Is artificial intelligence a bubble? Elders who experienced the last economic bubble are overly worried.
Wood used charts to illustrate that the share of capital expenditure in the technology industry as a percentage of GDP is approaching a historical high, similar to previous bubble periods, causing unease among investors. Wood said she knows many experienced investors who were young during the dot-com bubble and are now elderly with gray hair. Having experienced that bubble period, they believe in protecting themselves and their businesses from the effects of the bubble and tend to be more conservative in their corporate decisions, trying to avoid repeating the same mistakes.
Wood stated that the capital expenditure cycle related to artificial intelligence will be longer than in the past. The core of the debate lies not only in the scale of expenditure, but also in whether these technological investments can translate into stable and sustainable productivity in the future. During the dot-com bubble, most technologies were immature and too expensive, and the price-to-earnings ratio is completely different now. Now, a huge disruption has emerged called artificial intelligence. If companies want to remain competitive, they must invest in artificial intelligence; they must seize the opportunity. However, some shareholders who only focus on short-term gains do not think so.
Bitcoin rumors spread, exacerbating market volatility.
Gold prices have been rising steadily in recent years, but Bitcoin has clearly fallen from its peak. Wood points out through charts that since 2019, the correlation between Bitcoin and gold returns has been only about 0.14 (note: 1 represents perfect correlation), showing that Bitcoin's price behavior is significantly different from gold, and it is closer to a highly volatile risk asset than a traditional safe-haven asset.
She pointed out that the market has recently been filled with various negative rumors, weakening investor sentiment and further putting pressure on prices, triggering a period of selling. This situation is particularly common in highly volatile assets, often amplifying short-term price changes.
Wood also mentioned that Bitcoin's recent volatility stems partly from renewed focus on quantum computing. However, she believes that quantum computing is unlikely to pose a substantial threat to the current blockchain architecture within the foreseeable future of over a decade. In contrast, changes in macroeconomic liquidity have a more direct impact on the market. Factors such as government budget uncertainty, employment data, the Federal Reserve's federal benchmark interest rate, and international interest rate trends all exert contractionary pressure on the funding environment, thereby amplifying market volatility.
Wood concluded by noting that after each period of sharp market volatility, many believe they missed an opportunity to enter at the bottom, but when the actual bottom appears, market sentiment often turns into high panic. She argues that investment decisions should not focus solely on price movements but require a comprehensive assessment of multiple factors, including technical indicators, the macroeconomic environment, policy oversight, and market structure, to reduce decision-making bias.
This article, titled "Elders Fear AI Bubble, Rumors Cause Bitcoin Panic," first appeared on ABMedia, a ABMedia .
