Ark Invest’s Cathie Wood believes that cryptocurrencies may soon become part of the recommended portfolios for ordinary investors.
What happened: In his most recent interview with CNBC, Wood went so far as to say that currently volatile cryptocurrencies could soon stabilize and behave like bonds.
“We think that becoming a new, better-accepted asset class … We think it will behave, in fact, I would say more like the fixed income markets, believe it or not,” said Wood at CNBC’s Closing Bell.
The Ark CEO notes that a typical investor portfolio consists of a 60% allocation to stocks and a 40% allocation to bonds.
“This idea of a balanced 60-40 portfolio is somewhat problematic,” she notes, explaining that bond prices are especially high compared to history.
“We went through a 40-year bull market in bonds. We would not be surprised to see this new asset class become part of these percentages. Maybe 60% in stocks, 20% in bonds and 20 – in encryption, ”said Wood.
Why does it matter: Retail investors are often skeptical about allocating a percentage of their portfolio in cryptocurrencies due to the perceived risk.
However, more recently, some large retail investors have started making considerable allocations to cryptocurrencies – one of which is billionaire investor Kevin O’Leary, who recently released a 3% portfolio allocation for cryptocurrencies.
Analysts of JPMorgan Chase & Co. (NYSE: JPM) also recently recommended a 1% portfolio allocation for cryptocurrencies to its customers.
The 20% encryption allocation recommended by Wood, however, far exceeds what fund managers and investment banks have previously suggested.
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