Excessively high tax rates can actually inhibit tax revenue growth. Chairman Powell's shift in balance stems not only from political considerations surrounding his term ending in May of next year, but also reflects deeper economic concerns. If high interest rates persist, a substantial decline in home prices will be the only solution to the housing crisis. The US economy is currently on the verge of transitioning from a "rolling recession" to an "exceeding-expectations recovery." The Ethereum network is becoming the primary vehicle for the surge in stablecoins. Bitcoin's two core values: providing an entry point for institutional digital asset investments and serving as a digital representation of gold. In a bull market scenario, Bitcoin's goal of breaking $1 million within five years remains viable and may even be significantly surpassed. We're more focused on the potential of AI, which is the true driving force of change right now. From an investment perspective, markets like Europe face regulatory fragmentation and geopolitical risks. I believe AI will soon disrupt traditional quantitative strategies, completely commoditizing them. (I) Cathie's Journey CoinDesk: What's your earliest memorable memory of markets, financial systems, and innovation? Cathie Wood: In college, I had no idea where I wanted to go, so I explored a wide range of fields. Engineering, education, geology, astronomy, physics... I really dabbled in every field. To be honest, I didn't enroll in economics at the time, perhaps in part because my father specifically wanted me to take it. It wasn't until my last semester of sophomore year that I took it at UCLA, where I was completely hooked. Upon discovering UCLA didn't 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 saw my passion for economics and introduced me to Capital Group, then the largest and most prestigious investment firm in Los Angeles. When I first joined the firm, I knew nothing about the world of finance, but I instantly connected economics with the real world. The experience of participating in market activity almost instantly captivated me. I realized that this job not only paid me to learn, but also taught me how the world works. When I joined Capital Group at 20, I knew this would be my lifelong career. CoinDesk: What sparked your passion for economics? Cathie Wood: Although I had a close relationship with my father, my rebellious teenage years led me to avoid his economics recommendations. It wasn't until I met Professor Arthur Laffer that I was captivated by his unique teaching style. Each class involved real-world problems, sparked interest with jokes, and ultimately led to a blackboard full of formulas. He presented us with a panoramic view of the clash of economic schools of thought: Harvard Keynesianism, Chicago monetarism, and the supply-side approach he championed. This diverse perspective has served me well throughout my career. In the 1980s, when Wall Street was dominated by Keynesianism, I accurately foresaw that Reagan's supply-side reforms would usher in the longest bull market in history. Even during the economic downturn when interest rates soared to 15%, I remained steadfast in the truth of the Laffer Curve: that excessively high tax rates actually inhibit tax revenue growth. During my 18 years at Jenison Associates, we frequently invited my mentor to reinforce this principle. The intellectual foundation I laid during those years ultimately paved the way for me in the investment world. (II) Does the Fed's rare split hint at economic changes? CoinDesk: The Fed just decided to keep interest rates unchanged. What are your thoughts on the trend? Cathie Wood: Today's Fed resolution saw a rare two-vote dissent, the first dual dissent since 1993. Chairman Powell has always prioritized consensus in his decision-making, but the current imbalance may be a hidden threat. This reflects not only the political considerations surrounding his term ending in May, but also deeper economic concerns. The two dissenting members may have seen signs of continued weakness in the real estate market and the failure of tariff transmission, suggesting a continued decline in inflation. The job market is structurally divided, with rising unemployment among college graduates, reflecting the accelerated replacement of entry-level jobs by AI. We have observed a downward inflection in housing inflation, but statistical lags obscure the true trend. If high interest rates persist, a substantial decline in housing prices will be the only solution to the housing crisis. The US economy is currently on the verge of transitioning from a "rolling recession" to an "exceeding-expectations recovery." As policy uncertainty recedes, a surge in productivity will be the biggest bright spot over 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 lead to polarization: benign deflation for innovators and a devastating blow to incumbents. Mainstream economists currently severely underestimate the depth and breadth of this deflationary revolution. (III) With regulatory relaxation and the 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 for cryptocurrencies in the recovery? Cathie Wood: Regulatory shifts are reshaping the innovation landscape. The shift from the "law enforcement oversight" of the Gensler era to a friendly, legislatively guided framework is accelerating the rise of "agent AI": future AI assistants will make autonomous decisions and work collaboratively, requiring smart contracts as the underlying foundation. The value of integrating blockchain and AI becomes apparent when AI agents and media platforms automatically settle accounts. With regulatory oversight easing, traditional institutions are aggressively deploying blockchain technology. This will not only reduce payment costs from 3.5% to 1% (a 2% cost saving represents a significant efficiency boost when global asset management reaches $250 trillion within five years), but will also foster the emergence of agent-AI-driven micropayment networks. The "digital infrastructure" formed by these innovations is becoming the core engine of the next productivity revolution, a strategic pivot for the crypto economy in its new cycle. CoinDesk: Do you view Ethereum as the foundational layer for building an efficient agent-AI ecosystem? Cathie Wood: We continue to track the protocol selection logic of institutions investing in digital assets. Despite Solana's more impressive market performance, institutions like Coinbase and Robinhood still choose Ethereum as their underlying Layer 2 platform. This confirms our prediction that Ethereum will become an institutional-grade protocol. This stems from the security advantages provided by its more decentralized architecture, although transaction efficiency is not as high as Solana. The "bad income" provisions of the Investment Company Act of 1940 restrict funds from gaining exposure through ETFs, potentially losing tax benefits if profits from a single investment exceed 10%. We are now breaking this restriction by establishing an Ethereum position, and its value lies beyond its reserve asset. As an early investor in Circle, we have observed that the Ethereum network is becoming a primary vehicle for the stablecoin boom, and future staking returns will further enhance its utility. This stands in stark contrast to MicroStrategy's strategy of simply hoarding Bitcoin. (IV) Long-term bullish outlook on Bitcoin, but quantum risk is still 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 were to cite our biggest miscalculation of the past decade, it would be our initial assumption that Bitcoin would assume the role of a stablecoin in emerging markets. Tether co-founder Paolo admitted that it wasn't until the pandemic that he realized Tether had become a revolutionary tool for emerging markets to gain dollar exposure. Young people are starting to teach their parents that "there's no need to go to the black market to exchange currency." The explosive popularity of stablecoins has indeed exceeded our expectations, prompting us to potentially adjust the emerging market weighting in our "2025 Grand Vision" model. However, Bitcoin's two core value pillars remain unchanged: it serves as a gateway for institutions to invest in digital assets, and it represents a digital representation of gold. Based on this, we maintain our original forecast framework. Under a bull market scenario, the goal of Bitcoin exceeding $1 million within five years remains valid and may even be significantly exceeded. CoinDesk: As an investor known for foreseeing technological change, how do you view the potential threat posed by quantum computing to Bitcoin's security? Cathie Wood: We have established a Chief Futurist position dedicated to researching these existential issues. Former Research Director Brett and on-chain analysis authority David Puell continue to monitor relevant developments, and quantum computing is still in its quantitative transformation phase. Brett predicts that the quantum threat could manifest as early as the late 2030s, as the pace of AI evolution has far exceeded expectations, even surpassing the imagination of long-term observers like us. Many challenges originally planned to rely on quantum computing will be tackled first by AI. The exponential progress of AI training costs, which have dropped by 75% annually, and inference costs, which have dropped by 85-98%, has enabled its performance curve to continue to break through the ceiling. This computing power-driven technological paradigm is reshaping investment directions. We are focusing on the boundaries of AI's potential, which is the true driving force of current change. (V) ARK Invest's Crypto Allocation Methodology CoinDesk: Besides Bitcoin, what are the most noteworthy protocols or projects currently? Cathie Wood: We currently have a core allocation matrix of "Bitcoin + Ethereum + Solana" (although we previously had a large position in Solana, we have adjusted our position based on market dynamics), while continuously monitoring the development of Layer 2. We are compiling a special report for traditional financial practitioners, using quantitative tools such as the Sharpe ratio to analyze the return-risk characteristics of digital assets. Mirroring the Bitcoin Monthly model, we will regularly publish on-chain data analysis for Ethereum, Solana, and other blockchains. These blockchain-specific, transparent metrics are establishing new valuation dimensions not available in traditional markets. As more protocols mature, our research portfolio will continue to expand. CoinDesk: You just listed the three major crypto ecosystems. Do you also have a top three favorites in the crypto stock market? Cathie Wood: Within our core portfolio (ARKK, ARKF, ARKW), Coinbase, Circle, and Robinhood form a strategic triangle. Although Robinhood is a mixed portfolio, looking back at quarterly meeting minutes from three years ago shows that all our inquiries focused on its crypto business layout: "User demand is clear, what is your strategy?" We reduced our holdings due to their hesitation at the time, but the crypto product matrix presented at their analyst day now demonstrates their commitment to transformation. MicroStrategy, while a benchmark Bitcoin company, did not make the top three. We value the diversified value of "ecosystem bellwethers" like Coinbase. With Ethereum gaining institutional recognition, emerging targets like Bitmine Immersions have also been added to our strategic watchlist, reflecting our multifaceted strategy of "base protocol + application ecosystem." (VI) ARK's Three Major Battles: Regulation, Transparency, and AI Challenges CoinDesk: Which "existential" issues keep you up at night? Cathie Wood: What truly keeps us up at night is the disastrous regulatory trajectory in the United States over the past four years. We're even seriously considering shifting more research overseas. Especially in the blockchain sector, America's innovative vitality is being completely stifled. Blockchain represents the next generation of the internet revolution. Just as the internet allowed the United States to dominate the technological revolution, we are actively abandoning this larger-scale technological iteration. From an investment perspective, markets like Europe face regulatory fragmentation and geopolitical risks. We once publicly called SEC Chairman Gensler a "threat to innovation" during a live broadcast. Then we realized, as an institution regulated by the SEC, such statements carry real business risks. However, when they threaten the very foundations of American tech companies, we must speak out. CoinDesk: Why did you choose to publicly share transaction information on social media? What strategic significance does this transparency have for your business? Cathie Wood: After the 2008 financial crisis, we observed a trend of mutual funds being replaced by ETFs. As an active investor, I came up with the idea of embedding active strategies within an ETF framework. This innovation not only lowered investment costs by making ETF fees more transparent, but also responded to the market's desire for transparency in the post-crisis era. While our peers either turned to passive investing or pursued the "Big Six" of US stocks, leading to investment homogeneity, we focused on innovation. Although this strategy was largely ignored during the tech-heavy bull market of 2021-2024, its widespread adoption this year has validated our prediction. The practice of freely sharing research reports and publicly releasing trading records during the pandemic unexpectedly went viral in Asia, building a global brand. Based on my economics background, I predicted in March 2020 that massive stimulus policies combined with a 27% surge in the savings rate would lead to economic overheating. This prediction ultimately came true, but the subsequent interest rate hikes severely impacted innovative companies outside of the giants. CoinDesk: Have you ever worried that AI might surpass ARK's investment capabilities? Cathie Wood: Currently, AI is most likely to achieve breakthroughs in passive investing and benchmark-sensitive strategies. This is precisely the area many investors turned to during the dominance of the "Big Six" in US equities. In contrast, I'm more wary of the risks of benchmark-sensitive or quantitative strategies, those quantitative models that rely on factor analysis (traditional metrics like growth, cash flow quality, volatility, and profitability). When quantitative analysts examine our strategies, they find significant "residuals" that can't be explained by existing factors. This is precisely because the future won't simply repeat history, and we invest in the future. Quantitative models are essentially based on backtesting historical data, and this is precisely our advantage. I believe AI will soon disrupt traditional quantitative strategies, leading to their complete commoditization. However, our strategies rely on original research, which feeds large language models like OpenAI and Grok. While AI can perform certain pattern recognition tasks, this actually increases our research efficiency. For example, in our core "Wright's Law" analysis, AI will significantly reduce the burden of this time-consuming research. (Note: Wright's Law, a sister law of Moore's Law, states that for every doubling of output, costs decrease at a fixed rate.) But I never underestimate the value of human intelligence, especially the creativity of our research team. The synergy between AI and human researchers will propel our investment capabilities to new heights. (VII) A Conversation with "Little Cathie" CoinDesk: If you could go back and talk to your 20-year-old self, who was exploring all sorts of possibilities, what would you tell her? Cathie Wood: I would admire her open-mindedness. That time of exploration was truly enjoyable, and college is the perfect time to explore all sorts of possibilities. Devoting oneself to a field one is passionate about brings lasting satisfaction. The seeds of innovation I sowed in the first two decades of my career are now bearing fruit. Looking back at the dot-com bubble of the late 1990s, IPOs that saw a fourfold increase on their first day highlighted the market's frenzy. Take gene sequencing, for example. In 2003, the cost of a single procedure was as high as $2.7 billion, but now it costs only $200. This disparity between technological maturity and market performance precisely demonstrates the irrationality of crowds. The current market is healthy. Amidst a generally cautious atmosphere, cutting-edge fields like AI-powered healthcare are steadily developing. At the same time, investment opportunities are spreading from tech giants to emerging assets like blockchain, which is entirely in line with expectations. Disclaimer: The content of this article does not represent the views of ChainCatcher. The opinions, data, and conclusions expressed herein represent the personal views of the original author or interviewees. The editor maintains a neutral position and does not endorse their accuracy. This does not constitute professional advice or guidance. Readers should exercise independent judgment and use this information with caution. This compilation is for the purpose of knowledge sharing only. Readers are requested to strictly abide by the laws and regulations of their region and not to participate in any illegal financial activities.
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