Cathie Wood: Bitcoin Is a Hedge Against Deflation Fueled by AI and Technological Innovation

Bitcoin is more than just a hedge against inflation, according to ARK Invest CEO Cathie Wood. Speaking with Anthony Pompliano at Bitcoin Investor Week in New York, Wood said Bitcoin could also protect investors from a new wave of deflation driven by rapid advances in artificial intelligence, robotics, and other disruptive technologies.

Wood described an approaching “productivity shock” powered by exponential technological growth. Unlike traditional deflation tied to economic downturns, this shift would stem from breakthroughs that dramatically lower costs and increase output. She pointed to data showing AI training costs falling by roughly 75% per year, while AI inference costs have dropped as much as 98% annually. As businesses adopt these tools, they can produce more with fewer resources, putting downward pressure on prices across industries.

According to Wood, the Federal Reserve may be misreading these signals because it relies heavily on backward-looking data. If policymakers fail to anticipate technology-driven deflation, traditional financial systems—accustomed to 2% to 3% inflation—could face serious disruption. Margin compression, stress in private equity and private credit markets, and underperformance in sectors like software-as-a-service could create what she called “deflationary chaos.”

In that environment, Bitcoin stands out. Wood argues that Bitcoin serves as a hedge against both inflation and deflation due to its decentralized structure and fixed supply. Unlike traditional financial institutions exposed to counterparty risk, Bitcoin operates on a trustless blockchain network, insulating it from systemic fragility.

She also noted that today’s technology boom differs from the dot-com bubble. In her view, the underlying innovations—AI, blockchain, and digital assets—are now mature and delivering real productivity gains. As the economic narrative shifts from inflation concerns to productivity-driven deflation, Wood believes Bitcoin and innovation-focused investments are positioned to benefit from the long-term transformation of global finance.