TLDR
- Cathie Wood argues Bitcoin serves as a hedge against both inflation and coming deflation driven by AI breakthroughs
- AI training costs are dropping 75% yearly while AI inference costs fall up to 98% annually, creating massive price deflation
- Traditional banks and the Federal Reserve are unprepared for rapid productivity gains that will push prices down
- Bitcoin’s fixed supply and decentralized design offer protection when debt-based financial systems face pressure
- ARK Invest holds major positions in Coinbase and Robinhood as part of its bet on this technological shift
ARK Invest CEO Cathie Wood presented a new case for Bitcoin ownership at Bitcoin Investor Week in New York on February 12, 2026. She told attendees that the cryptocurrency will become valuable protection against deflation caused by artificial intelligence. Wood spoke with Anthony Pompliano about how rapid technology advances will disrupt traditional finance.
Wood explained that AI breakthroughs are creating a productivity shock that will force prices down across the economy. According to data she cited, the cost to train AI models is falling by 75% each year. The cost to use AI, known as inference costs, is dropping by as much as 98% annually.
These declining costs mean businesses can produce goods and services cheaper and faster than before. Wood believes this trend will challenge traditional financial systems built around steady 2% to 3% inflation. Legacy banks operate on the assumption that prices rise gradually over time.
The Federal Reserve relies on backward-looking economic data to make decisions. Wood warned that central bank officials could miss the deflationary trend until significant damage occurs. “They could miss this and be forced into a response when there’s more carnage out there,” she said during her talk.
Traditional finance depends on debt and multiple layers of intermediaries. Wood argued these systems could face serious strain as deflation compresses profit margins. She pointed to current struggles in software companies and private credit markets as early warning signs.
Bitcoin as Protection Against Technology-Driven Deflation
Bitcoin operates differently from traditional financial assets. The cryptocurrency has a fixed supply of 21 million coins and runs on a decentralized network. No central authority controls its issuance or management.
Wood described Bitcoin as “a hedge against inflation and deflation.” She emphasized that the cryptocurrency doesn’t carry the same counterparty risks found in traditional finance. When banks and financial institutions struggle to adapt to rapid price changes, Bitcoin remains insulated from their problems.
The simplicity of Bitcoin stands in contrast to complex financial products. Wood believes this quality becomes valuable when layered financial systems face pressure from deflation. Debt-based growth models that work during inflationary periods may fail when prices fall.
Wood distinguished the current moment from the tech bubble of the late 1990s. Back then, investors poured money into internet companies before the technology was ready. “Now, they’re real — and we’re on the flip side of the bubble,” she explained.
ARK Invest’s Positioning
ARK Invest has built its portfolios around disruptive technologies for years. The firm maintains positions in blockchain and cryptocurrency companies as part of this strategy. ARK is one of the largest institutional holders of Coinbase stock among asset managers.
The investment firm also holds a major stake in Robinhood. These holdings reflect Wood’s belief that cryptocurrency platforms will benefit as the economic environment shifts. She sees innovation-focused investments gaining value as productivity-driven deflation becomes reality.
Wood acknowledged that markets remain volatile in the current environment. However, she expressed confidence in her firm’s investment thesis. “Truth will win out,” she told the Bitcoin Investor Week audience.
The ARK Invest CEO made clear that her firm believes in the long-term value of technological innovation. She described their investment approach as being “on the right side of change.” Wood expects that decentralized alternatives like Bitcoin will prove their worth as traditional systems struggle.
Financial institutions will need to embrace new technologies faster than they expected. Wood predicts chaos and disruption across multiple sectors as this adjustment happens. She believes Bitcoin’s trustless design positions it as a safe option when other systems face stress.
