NFTs, digital wallets will become huge opportunities

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NFTs, digital wallets will become huge opportunities

Cathie Wood, Chief Executive Officer and Chief Investment Officer, will speak at the Milken Institute Global Conference on May 2, 2022 in Beverly Hills, CA.

Patrick T. Fallon | AFP | Getty Images

ArkInvest CEO Cathie Wood said Tuesday that digital property rights related to non-fungible tokens (NFTs) and decentralized finance (DeFi), which have underpinned the emergence of Web3, will be “very important.”

“DeFi was on track and impressed with how robust the ecosystem was,” Wood said of CNBC’s “Squawk Box.” The “token revolution” surrounding NFTs is “early.” Added.

NFTs (unique digital assets validated and stored using blockchain technology, such as artwork and sports trading cards) surged in popularity in 2021. People create, collect, and trade NFTs and trade for millions of dollars. However, experts are still skeptical that NFTs are a good investment.

Bill Gates described the phenomenon of cryptocurrencies and NFTs as “based on more than 100% idiot theory” in TechCrunch’s talk on global warming last week, an overvalued asset when there are enough investors. Mentioned the idea that the price of the money would go up to pay them more.

Billionaire Microsoft co-founder joked that “expensive digital images of monkeys” “significantly improve the world.”

The NFT surge is still quite new, but huge amounts of money have already been exchanged among collectors. For example, according to NonFungible, which tracks NFT’s historical sales data, NFT collections have generated over $ 6.2 billion in sales and digital art has generated over $ 1.9 billion in sales since 2017.

“We believe that the digital property rights represented by NFTs will be very important,” Wood said, adding that her financial background taught her the value of property rights in helping people save people from poverty. ..

Creators in the NFT space have long made the same claim, and investors like Wood have quickly argued that the long-term value of digital assets comes from their usefulness. This is a message that was difficult for institutional investors to digest as collectable artwork such as the well-known Bored Ape Yacht Club became a central stage in the early days of NFTs. These NFT collections have dropped significantly in value over the past few months. The crypto punk, which was as hyped as the boring Ape Yacht Club, recently saw prices plummet.

Some tech icons believe that more pain will come. Eric Schmidt, former Google Chairman and Chief Executive Officer and co-founder of Schmidt Futures, told CNBC’s Squawk Box at the Aspen Ideas Festival on Tuesday: go. “

However, Wood’s comments suggest she is worried about the recent sale.

“We are believers and I don’t think it’s a bad thing if the ecosystem is integrated. I think digital wallets will be one of the most important achievements here. They are effectively in our pockets. It’s a bank branch of. “Wood said. “These will be great opportunities.”

Innovation-focused investors were in a difficult situation in 2022 as her disruptive technology darling was one of the biggest losers of the year in the face of rising interest rates. Her flagship active fund, Ark Innovation ETF (ARKK), has fallen by a whopping 52% year-to-date, down 66% from the record high set in February 2021.

Still, Mr Wood said clients are mostly sticking to her and new money is flowing in as investors seek diversified investment in the downmarket. According to FactSet, ARKK’s June inflows exceeded $ 180 million.

Meanwhile, crypto investors continue to aggressively raise rates and exacerbate the liquidity crisis, putting key players in financial difficulty. More space is still upset since the fallout of the $ 60 billion collapse of the two major tokens last month.

“Many people expect the Terra Luna meltdown to cause a systemic chain reaction, which we see a bit, but so far Ethereum has held up very well,” Wood said. He talked about his failure.

In addition to broader crypto concerns, Celsius, a crypto lending platform that promised high yields to users depositing cryptocurrencies, suspended its withdrawal earlier this month. On Monday, the well-known crypto hedge fund Three Arrows Capital defaulted on a loan worth more than $ 670 million from Voyager Digital.

⁠— CNBC Yun Lee Contributed to this story.

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