Will Deflation Hurt Bitcoin? | Cathie Wood
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Why is deflation considered a bigger macro risk than inflation?
I think we're going to start talking about deflation more and more, and I believe interest rates are going to come down more than people expect until this productivity driven boom is obvious.
If we get deflationary forces or get actual deflation, is that bad for Bitcoin in the short term? All right.
How is AI contributing to deflationary forces in the economy?
Let's start with inflation and deflation. One of the things that's interesting to me is I've been talking about deflation is a bigger risk. I see you tweeting about it. So you're in spirit. We are locked in this together. What is your read on why deflation is a bigger risk?
So it's a risk and an opportunity. So there's bad deflation and good deflation. If you look at the government measures, they will tell you today we're kind of stuck in this 2% to 3% range.
Does deflation negatively impact Bitcoin in the short term?
If you look at a more modern indicator, Truflation, I think you feature it as well. I don't know if I should call you Pomp or Anthony, but anyway.
What role does Bitcoin play as a hedge against inflation and deflation?
Call me a Kathy fanboy. Oh, you're funny.
What are the emerging risks that investors should be aware of?
Thank you. So, truflation is down to 0.8%.
How does ARK Invest approach innovation investing?
And so it, too, was stuck in that 2% to 3% range. It is resolving to the downside. And I think it's going to go negative.
What is the significance of convergence in technology and its impact on the economy?
When I see Pepsi cutting the price of potato chips and Doritos by 15%, I take note. And when I hear Coke saying, yeah, it seems like there's a bit of a backlash against price increases, I take note today the existing home price inflation rate dropped to zero point nine percent on a year over year basis. And we think that's going to go negative.
What should investors consider for their portfolios in 2026?
New home prices are already falling on a year over year basis. Gasoline prices falling. And then the good deflation is associated with technologically enabled innovation. And, you know, the AI boom is massively deflationary. The AI training costs are dropping 75% per year. AI inference costs, so what it costs when you query ChatGPT or Grok, what it costs to answer that, that's dropping 85% to, if you believe DeepSeq, 98% per year. And I think the productivity gains that we are seeing accrue to enterprises, that is going to turn around in a number of ways. One of them could be price declines. So many people think, oh, these corporations are going to simply increase their margins. Well, you know, China is exporting deflation.
I know with tariffs we're countering it. But isn't it interesting that our inflation rate did not go accelerate with tariffs? It remained stuck. I think I think we're going to see a lot of price declines in the future.
When you think of the AI explosion, I think it is operating, obviously, in this complex environment. So you have deregulation. You have tax cuts. You have deportations. You have the AI boom. You have a global monetary reset where we are trying to weaken the U.S. dollar. You have the tariffs. You kind of put all this together. How important do you think is it that the president, the treasury secretary and the Fed chair nominee all seem to be on the same team? Seems like they are going to go and implement this plan, which means that for investors, maybe it's going to be a little bit more of a complex environment to navigate in the coming years as we go through this kind of reset.
You know, it's so interesting. Many people are asking, you know, is this just a hype cycle and, you know, should we pull away? I don't know if you've seen the markets in the last couple of days, but, you know, now algorithms are assuming that AI is going to destroy industries wholesale. This is not what happened during the late 90s. And I will get back to your question. In the late 90s, when Jeff Bezos said, you know, we're going to invest so much more than we expected because this opportunity is so great. And that means we are going to lose so much more money than you shareholders expected us to lose. The stock absolutely took off to the upside. Any company saying that today is getting hammered. So we are in a completely different environment.
Your question was the various parts of the administration being united. You mean when Kevin Warsh comes on board. Right now, of course, Powell is not at all aligned with Trump. You mentioned dollar devaluation.
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Chapters
8 chapters
1
Why is deflation considered a bigger macro risk than inflation?
0:00–0:22
2
How is AI contributing to deflationary forces in the economy?
0:22–0:53
3
Does deflation negatively impact Bitcoin in the short term?
0:53–1:07
4
What role does Bitcoin play as a hedge against inflation and deflation?
1:07–1:12
5
What are the emerging risks that investors should be aware of?
1:12–1:18
6
How does ARK Invest approach innovation investing?
1:18–1:27
7
What is the significance of convergence in technology and its impact on the economy?
1:27–1:59
8
What should investors consider for their portfolios in 2026?
1:59–21:20
Speakers
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