Cathie Wood is concerned about an economic downturn due to Trump's tax policies.

CEO of ARK Invest, Cathie Wood, believes that the White House is underestimating the risk of economic recession due to President Donald Trump's tariff policies — a mistake that could force the administration and the Federal Reserve (Fed) to implement growth-boosting policies.

Speaking online at the Digital Asset Summit in New York on March 18, Wood stated that U.S. Treasury Secretary Scott Bessent is not concerned about a recession.

However, she emphasized the opposite: "We are concerned about the recession," and explained that "the rate of money circulation is decreasing sharply."

A slowdown in the velocity of money means that there is less circulating capital, a typical sign of recession when businesses and consumers limit spending and investment.

"If the economy truly goes into recession and GDP declines, this will provide the president and the Fed with more room to implement tax cuts and monetary easing," Wood remarked.

Investors believe that a turning point may come in the next few months when the Fed ends its quantitative tightening program (QT) — something that bettors on Polymarket believe is certain to happen before May.

Meanwhile, expectations for multiple rate cuts in the second half of the year are increasing, according to CME Group's federal funds futures contracts.

The U.S. Federal Open Market Committee (FOMC) is expected to hold an important meeting tomorrow, March 20.

The probability of lower interest rates at the Fed meeting on June 18 is nearly 65% | Source: CME Group## Long-term vision with cryptocurrency

ARK Invest and Cathie Wood are seasoned cryptocurrency investors. ARK's and 21Shares' Bitcoin spot ETF was approved on January 11, 2024, and is currently managing over $3.9 billion in assets, according to Yahoo Finance.

ARK has also partnered with Eaglebrook Advisors to provide cryptocurrency investment solutions for asset managers.

The spot Bitcoin ETFs have recorded significant outflows in recent weeks, but the overall trend indicates that investors are maintaining their positions | Source: FarsideAt the conference, Wood emphasized that long-term innovation always prevails despite short-term market fluctuations. When asked whether cryptocurrency assets still represent a "viable investment direction" in the long term, she affirmed that this is indeed the core strategy of ARK.

"We are not only focusing on the three major coins," she said, referring to Bitcoin, Ether, and Solana.

The main supporting factor is cryptocurrency-friendly policies, which significantly improve the investment environment.

"The policy changes are paving the way for financial institutions. Looking back at our research from 2016, when ARK published the analysis 'Bitcoin: The Birth Bell of a New Asset Class,' many organizations ignored it at that time. But now, they are taking it seriously and realizing that they have a fiduciary responsibility to help clients access this new asset class," Wood concluded.

Disclaimer: This article is for informational purposes only and is not investment advice. Investors should conduct thorough research before making decisions. We are not responsible for your investment decisions.

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