Ark Invest’s Cathie Wood says the rise of AI and innovation will create “deflationary chaos” in which bitcoin will thrive.

Cathie Wood: Bitcoin Set to Benefit from AI-Driven Deflation

New York — Bitcoin (BTC $69,648.01) is more than an inflation hedge, according to ARK Invest CEO Cathie Wood. Speaking at Bitcoin Investor Week, she framed the cryptocurrency as a safeguard against an even bigger disruption: deflation caused by rapid technological advancement.

In a conversation with Anthony Pompliano, Wood said traditional financial systems are unprepared for an impending “productivity shock” fueled by AI, robotics, and other exponential technologies. She warned that this wave of innovation will push prices lower, disrupt legacy business models, and create what she calls “deflationary chaos.”

“If these technologies are so deflationary, it’s going to be tough for the traditional world — used to 2% to 3% inflation — to adjust,” Wood said. “They’ll have to adopt these technologies faster than expected.”

Wood emphasized that the deflation is not from economic collapse but from breakthroughs that reduce costs and boost output. She cited AI training costs falling 75% per year and inference costs dropping up to 98% annually, making businesses far more productive with fewer inputs.

She also warned that the Federal Reserve, relying on backward-looking data, could misread the trend and respond too late. “They could miss this and be forced into a response when there’s more carnage out there,” she said.

In this environment, bitcoin’s appeal is clear. “Bitcoin is a hedge against inflation and deflation,” Wood said, highlighting its decentralized design and fixed supply as protection against the fragility of traditional finance.

ARK Invest has long positioned its portfolios around disruptive technologies, including blockchain, with significant holdings in Coinbase (COIN) and Robinhood (HOOD).

“Truth will win out,” Wood concluded. “We believe we’re on the right side of change.”

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