Important points
- Cathie Wood arc Invest believes Bitcoin is a powerful portfolio diversification tool due to its low correlation with other major asset classes.
- An analysis of weekly returns from 2020 to 2026 shows that Bitcoin has a lower correlation with gold (0.14) compared to the correlation between the S&P 500 and bonds (0.27).
Bitcoin’s low correlation with major asset classes such as gold, stocks and bonds positions it as a powerful tool for portfolio diversification and increasing returns per unit of risk, he said. arc Investment CEO Cathie Wood said in her 2026 outlook released on Thursday.
arcanalysis of weekly returns from January 2020 to early January 2026 shows that the correlation between Bitcoin and gold is a modest 0.14, much lower than the correlation between the S&P 500 and bonds of 0.27.
Bitcoin has the lowest correlation with bonds (0.06), slightly higher correlations with gold and REITs, and highest correlation with the S&P 500 at 0.28. Even at its peak, Bitcoin’s correlation remains much lower than that of traditional asset pairs such as the S&P 500 and REITs (0.79).
“Bitcoin should be a good source of diversification for asset allocators seeking higher returns per unit of risk in the coming years,” Wood wrote.
Regarding Bitcoin mining, Wood said that growth in the supply of Bitcoin is severely limited by the protocol, with new issuance expected to increase by about 0.8% per year over the next two years, before slowing to about 0.4% per year.
Unlike gold, where miners can produce more as the price rises, Bitcoin’s supply is mathematically fixed and is inherently scarce. He noted that this predictable supply schedule and increased demand are contributing to the 360% price increase from late 2022 onwards.
arc The Invest CEO also outlined his outlook for the US economy, monetary policy, and AI.
He described the economy as a “coiled spring” poised for recovery, highlighting lower inflation and tax policies that could boost income and business cash flow growth, and said AI, robotics, energy storage, blockchain and multi-omics could boost productivity and support strong GDP growth.
