Cathie Wood strongly disputes Jack Dorsey’s ‘hyperinflation’ warning, but they agree on one asset class — in any market environment
Hyperinflation — rapid, out-of-control general price increases — may not seem that relevant at the moment, but Twitter co-founder and CEO Jack Dorsey believes otherwise.
“Hyperinflation is going to change everything. It’s happening,” he warns in a tweet last month.
Dorsey adds that hyperinflation “will happen in the U.S. soon” and will spread across the globe.
Ark Invest founder and CEO Cathie Wood, on the other hand, disagrees.
She argues that it’s “the rate at which money turns over” that causes inflation, and that rate is falling.
Wood even expects the opposite of inflation: deflation.
“Technologically enabled innovation is deflationary and the most potent source,” she tweeted recently.
The neat part?
No matter whose side you’re on, both Dorsey and Wood believe in a particular asset — one that many predict will be a great hedge against inflation. It’s Bitcoin.
Here’s a look at how these two business titans are tapping into the crypto boom — and how you can tag along with some of your spare change.
Bitcoin going to $500K?
Wood is no stranger to making bold predictions, but her price target for Bitcoin may shock even the most bullish crypto enthusiasts.
In September, the super investor told CNBC that the price of bitcoin could soar to over $500,000 in five years.
And she’s doing more than just talking. Her flagship fund — ARK Innovation ETF — owns 3.69 million shares of Coinbase Global, a stake worth over $1.2 billion.
In fact, Coinbase is the third-largest holding of the ARKK ETF right now.
As the largest cryptocurrency exchange in the U.S., Coinbase makes money every time someone buys or sells crypto on its platform.
In Q3, the company had 7.4 million monthly transacting users. It earned $1.24 billion in net revenue and $406 million in net income for the quarter.
To be sure, Coinbase shares trade at over $330 each. But you can get a piece of the company using a stock trading app that allows you to buy fractions of shares with as much money as you are willing to spend.
Bitcoin to unite the world?
You don’t have to look very far to see where Dorsey stands on the subject of Bitcoin. His Twitter bio says only this: #bitcoin.
In August, Dorsey tweeted that Bitcoin “will unite a deeply divided country” and eventually the world.
Dorsey told investors earlier this year that Bitcoin will be a “big part” of the social media company’s future.
But Dorsey’s most direct involvement in the cryptocurrency is through Square, another tech giant he co-founded.
The company got into crypto quite early: Square’s Cash App allowed users to buy Bitcoin in late 2017. Users can now send and receive Bitcoin in the app without paying any transaction fees.
In Q3, Square’s Bitcoin revenue totaled $1.81 billion. The company is also building a Bitcoin mining system.
A finer (hyper)inflation hedge?
One of the main reasons Bitcoin can be an inflation hedge is its limited supply. Unlike fiat money — which can be created out of thin air — the number of bitcoins is capped at 21 million by mathematical algorithms.
But Bitcoin is not the only in-demand asset with a limited supply.
If you want to invest in something that’s inflation-proof that has little correlation with stocks and crypto, consider a real, but overlooked asset: fine art.
Contemporary artwork has already outperformed the S&P 500 by a commanding 174% over the past 25 years, according to the Citi Global Art Market chart.
Investing in art by the likes of Banksy and Andy Warhol used to be an option only for the ultrarich, like Dorsey and Wood.
But with a new investing platform, you can invest in iconic artworks too, just like Jeff Bezos and Bill Gates do.
