Why Cathie Wood’s ARK Invest Modified Its $1.5M Target | CoinDesk Spotlight

Guest: Cathie Wood, CEO and CIO of ARK Invest

Podcast Date: August 12, 2025

Compiled and edited by LenaXin and ChainCatcher

ChainCatcher Editor’s Summary:

This article is compiled from a podcast interview between Coindesk and Ark Invest CEO and CIO Cathie Wood. She explains how the rapid adoption of stablecoins has influenced her famous prediction of Bitcoin reaching $1.5 million, explores her personal journey into economics research and her unique investment philosophy, and reveals Ark Invest's crypto asset allocation methodology, transparent strategy operation logic, and regulatory dilemmas.

ChainCatcher did the collation and compilation.

Wonderful Views

• Excessively high tax rates will actually inhibit tax revenue growth.
• Chairman Powell's decision to break the balance is driven by political considerations as his term will end in May next year, but also reflects deep-seated economic concerns.
• If the high interest rate environment continues, a substantial drop in house prices will become the only way to resolve the housing crisis.
• The U.S. economy is currently on the eve of switching from a "rolling recession" to an "exceeding-expectations recovery."
• The Ethereum network is becoming the main carrier for the outbreak of stablecoins.
• Bitcoin’s two core values: the entry point for institutions to allocate digital assets and the digital form of gold.
• In a bull market scenario, the goal of Bitcoin breaking through $1 million within five years still holds true and may even be significantly exceeded.
• We are more focused on the potential boundaries of AI, which is the real main line of change at present.
• From an investment perspective, markets such as Europe face regulatory fragmentation and geopolitical risks.
• I believe AI will soon disrupt traditional quantitative strategies and completely commoditize them.

1. Cathie’s Journey

CoinDesk: What is your earliest and most vivid memory about markets, financial systems, and innovation?

Cathie Wood : In college, I had no idea what I wanted to do, so I tried everything. Engineering, education, geology, astronomy, physics... I really dabbled in everything. Honestly, I didn't take economics, probably partly because my father was so keen on me taking it. It wasn't until my last semester of sophomore year at UCLA that I took it and was completely hooked.

After discovering that UCLA had no undergraduate business program, I immediately transferred to the University of Southern California, where I met the renowned economist Arthur Laffer. It was he who, recognizing my passion for economics, introduced me to Capital Group, then the largest and most prestigious investment firm in Los Angeles.

When I first joined the company, I knew nothing about the world of finance, but I instantly saw the connection between economics and the real world. The feeling of participating in market activities almost instantly made me fall in love with the investment industry. I realized that this job not only paid me a salary and allowed me to learn, but also explained the logic of how the world works. When I joined Capital Group at the age of 20, I decided that 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 the economics courses he recommended. 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 different schools of thought in economics: Harvard Keynesianism, Chicago monetarism, and the supply-side school of economics that he was dedicated to promoting.

This diverse perspective has served me well throughout my career. In the 1980s, when Wall Street was dominated by Keynesianism, I accurately predicted that Reagan's supply-side reforms would unleash the longest bull market in history. Even during the economic downturn when interest rates soared to 15%, I remained steadfast in my belief in the Laffer Curve's truth: excessively high tax rates actually inhibit tax revenue growth. During my 18 years at Jenison Associates, we frequently invited our mentor to reinforce this philosophy. The intellectual foundation I laid during those years ultimately paved the way for me in the investment world.

(2) Does the rare disagreement at the Federal Reserve hide economic changes ?

CoinDesk: The Federal Reserve just decided to keep interest rates unchanged. What are your thoughts on where interest rates are headed?

Cathie Wood: Today's Federal Reserve decision saw a rare two-vote dissenting vote, the first such dissent since 1993. Chairman Powell has always prioritized consensus in his decisions, but the current imbalance may be a hidden threat. This reflects both political considerations surrounding his term ending in May and deeper economic concerns.

The two dissenting directors may have observed 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 rates for college graduates, reflecting the accelerating displacement 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 house 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 a "surpassing recovery." As policy uncertainty recedes, a surge in productivity over the next 6-9 months will be the biggest bright spot. Technological breakthroughs in robotics, energy storage, AI, blockchain, and gene sequencing are creating unprecedented deflationary forces. This "creative destruction" will lead to polarization: benign deflation for innovators and a devastating blow to incumbents. Mainstream economists have seriously underestimated the depth and breadth of this deflationary revolution.

(3) With regulatory relaxation and the AI revolution, will Ethereum become the core of institutional crypto infrastructure?

CoinDesk: Looking ahead to the next 6-9 months, what role will cryptocurrencies play in the recovery you foresee?

Cathie Wood: The regulatory shift is reshaping the innovation landscape. The shift from the "enforcement oversight" of the Gensler era to a more legislatively guided, friendly framework is accelerating the rise of "agent-based AI": future AI assistants will make autonomous decisions and collaborate, requiring the underlying support of smart contracts. When AI agents and media platforms automatically settle accounts, the value of integrating blockchain and AI becomes increasingly prominent.

As regulations ease, traditional institutions are aggressively deploying blockchain technology . This will not only reduce payment costs from 3.5% to 1% (a 2% cost reduction represents a significant efficiency boost when global asset management reaches $250 trillion within five years), but will also foster the emergence of agent-based AI-driven micropayment networks. The "digital infrastructure" formed by these innovations is becoming the core engine of the next productivity revolution, a strategic fulcrum for the crypto economy in its new cycle.

CoinDesk: Do you see Ethereum as a foundational layer for building an efficient agent-based 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 Layer 2 underlying platform. This confirms our prediction that Ethereum will become an institutional-grade protocol. This is due to the security advantages brought by its more decentralized architecture, although its transaction efficiency is not as good as Solana.

The "bad income" provisions of the Investment Company Act of 1940 restrict funds from gaining exposure through ETFs, and tax benefits may be lost when profits from a single investment exceed 10%.

Now that we've broken through this limitation and established an Ethereum position, its value lies beyond simply being a reserve asset. As an early investor in Circle, we've 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 for Bitcoin, but it is too early to predict quantum risks

CoinDesk: Has your stance on Bitcoin changed? I know you previously predicted that Bitcoin would reach $1.5 million by 2030. Has that forecast changed?

Cathie Wood: If we were to cite the 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 exposure to the US dollar. Young people are starting to teach their parents that "there's no need to go to the black market to exchange currency."

The explosive adoption 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 an entry point for institutional investors to invest in digital assets, and it serves as a digital representation of gold.

Based on this, we maintain our original forecast framework. In a bull market scenario, the goal of Bitcoin breaking through $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 quantum computing poses to Bitcoin’s security?

Cathie Wood: We've established a Chief Futurist position to research these existential questions. Former Research Director Brett and David Puell, an authority on on-chain analysis, continue to monitor relevant developments. Quantum computing is still in its quantitative transformation phase.

Brett predicts that the quantum threat could manifest as early as the late 2030s, as AI is evolving at a rate far exceeding expectations and even the imagination of long-term observers like us. Many challenges originally planned to rely on quantum computing will be tackled first by AI.

AI training costs are declining exponentially by 75% annually, and inference costs are dropping by 85-98% annually, pushing its performance curve further and further above its ceiling. This computing-driven technological paradigm is reshaping investment directions. We are focusing on the boundaries of AI's potential, as this represents the true driving force of change.

(V) ARK Invest’s Cryptocurrency Allocation Methodology

CoinDesk: Outside of Bitcoin, what are the most noteworthy protocols or projects right now?

Cathie Wood: We have currently formed a core configuration matrix of "Bitcoin + Ethereum + Solana" (although we once had a heavy position in Solana, we have adjusted our positions according to market dynamics), while continuing to monitor the development of Layer 2.

We are currently developing specialized reports for traditional financial practitioners, utilizing quantitative tools like the Sharpe ratio to analyze the risk-return characteristics of digital assets. Following the model of the Bitcoin Monthly, we will regularly publish on-chain data analysis for Ethereum, Solana, and other blockchains. These blockchain-specific, transparent metrics are creating new valuation dimensions unavailable in traditional markets. As more protocols mature, our research footprint will continue to expand.

CoinDesk: You just listed the top three crypto ecosystems. Do you have a top three pick in the crypto stock market?

Cathie Wood: Within our core portfolio (ARKK, ARKF, ARKW), Coinbase, Circle, and Robinhood form a strategic triangle. While Robinhood is a hybrid, looking back at quarterly meeting minutes from three years ago, we can see that all our inquiries focused on its crypto business development: "User demand is clear, what is your strategy?" We reduced our holdings due to their hesitation at the time, but the crypto product matrix they presented at their analyst day confirms their commitment to transformation.

Although MicroStrategy is a benchmark Bitcoin company, it didn't 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 "foundational protocol + application ecosystem."

(6) ARK’s three major battles: regulation, transparency, and AI challenges

CoinDesk: What “existential problems” keep you up at night?

Cathie Wood: What's really keeping us awake at night is the disastrous regulatory trajectory in the US over the past four years. We've even begun to seriously consider 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 US to dominate the technological revolution, we are actively abandoning this larger-scale technological evolution.

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. We were shocked to realize that we are an SEC-regulated institution, and while such statements do carry business risks, we must speak out when they threaten the very foundations of American tech companies.

CoinDesk: Why do you choose to share transaction information publicly 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 are either turning to passive investing or chasing the "Big Six" stocks, leading to investment homogeneity, we focus on investing in innovative sectors. Although this strategy was largely ignored during the bull market dominated by technology stocks from 2021 to 2024, the widespread market momentum this year has validated our judgment.

The practice of freely sharing research reports and publicly disclosing 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 trigger economic overheating. This prediction ultimately came true, but the subsequent interest rate hikes dealt a severe blow to non-giant innovative companies.

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 the US stock market. In contrast, I am more wary of the risks of benchmark-sensitive or quantitative strategies, those that rely on factor analysis (traditional metrics such as growth, cash flow quality, volatility, and profitability).

When quantitative analysts examine our strategies, they find significant residual variance that cannot be explained by existing factors. This is precisely because the future will not simply repeat history, and we invest in the future. Quantitative models are inherently based on backtesting historical data, which 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 in turn improves our research efficiency. For example, AI will significantly reduce the time-consuming burden of analyzing our core "Wright's Law" research.

(Note: Wright's Law is a sister law of Moore's Law, which states that every time output doubles, costs decrease at a fixed rate.)

But I will 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.

(7) Dialogue with "Little Cathie"

CoinDesk: If you could go back in time and talk to your 20-year-old self, who was exploring all sorts of possibilities, what would you tell her?

Cathie Wood: I admire her open-mindedness. That period of exploration was truly enjoyable, and university is the perfect time to explore all sorts of possibilities.

Investing in a field you're passionate about brings lasting satisfaction. The seeds of innovation I planted during the first two decades of my career are now bearing fruit.

Looking back at the dot-com bubble of the late 1990s, IPOs that quadrupled on their first day highlighted market frenzy. Take gene sequencing, for example. The cost of a single test was as high as $2.7 billion in 2003, but now it's just $200. The disparity between technological maturity and market performance is a testament to the irrationality of the crowd.

The current market is healthy. Amidst a generally cautious atmosphere, cutting-edge fields like AI healthcare are developing steadily. At the same time, investment opportunities are spreading from tech giants to emerging assets like blockchain, which is entirely in line with expectations.