Which financial organizations want to include Bitcoin in their accounting moving forward? What kinds of retirement funds are considering investing in digital assets? It would be naive to expect anyone related to conventional banking to move into the area in the wake of the FTX implosion, which I wrote about in further detail here. The implosion has received so widespread media attention. Is there no way to undo the damage?

Cathie Wood alludes to a potential setback for the institution.
In this context, I felt the interview that Ark Invest founder Cathie Wood gave to Bloomberg the week before was really illuminating. She even restated in the interview her faith in her price prediction of Bitcoin, which she believes would be worth $1 million per coin by the year 2030. She has been renowned for a long time for her extremely enthusiastic views on anything and everything related to Bitcoin.

This neither came as a shock nor was it completely unforeseen by anyone. Wood is certain that Bitcoin will fundamentally alter the macroeconomic environment in the long run. As the performance of her flagship exchange-traded fund (ETF) demonstrates below, she has taken quite aggressive positions in the market, betting on high-risk technology firms, Bitcoin, and other assets that have struggled throughout the transition to a new interest rate paradigm.

Despite this, I thought that there was something more in the interview that stood out. She stated, "I do think that the one thing that will be delayed is potentially institutions standing back and simply thinking, 'OK, do we truly understand this?'" "I do think, though, that this is the one thing that will be postponed."

This provides a clue as to the major risk that exists here. One of the things that has been most optimistic for Bitcoin over the entire epidemic has been the trend of institutions flooding into the market. Tesla was one of them. There was discussion about ETF. There were shades of gray. There were corporations that dealt in public mining. There was a company called Coinbase that was trading on the stock market. Bitcoin has already been recognized as legal money in the Central American nation of El Salvador.

But now that the climate of low interest rates has ended and liquidity is being drained out of the economy, Bitcoin and other cryptocurrencies are confronting something that they have never had to face before: a downturn in the larger economy. This is something that they have never had to face before.

Let us not forget that the year 2009 marked the beginning of the largest bull market in the history of the world when Bitcoin was first introduced. As a result of the fact that it has not yet been put to the test in the midst of a bearish macro situation, none of this has ever happened before. In addition, cryptography is struggling to pass this exam.

BlockFi, Celsius, Voyager, Three Arrows Capital, and all the other bankrupt firms, which are now joined by FTX, have also painted cryptocurrency in such a negative light that it is not surprising to hear analysts warn of pullbacks in institutional adoption. FTX is the most recent company to join this list. If there wasn't, it would be even more of a shock, wouldn't it?

Optimism
It is important to note that Wood did mention that she believed Bitcoin will emerge from this situation "smelling like a rose." Despite the fact that I wouldn't go quite that far - if you ask me, the entire business as a whole is taking a beating to its reputation – I can see where she is coming from.

However, despite the fact that Bitcoin may not have any counterparty risk and is therefore, in theory, immune to the kinds of implosions that we have witnessed at centralized corporations like FTX, the real world continues to exist. And in the actual world, centralized enterprises are required in order for the common citizen, much alone institutions, to have access to it.

Bitcoin will not be able to acquire any real momentum in the mainstream financial arena until greed, irresponsible leverage, naive risk management, and plain fraud (not naming names) in the business are eliminated. After so many high-profile failures, institutions are going to be much more cautious about making investments in the industry today. The regulatory apparatus is gearing up for action. The amount of money being made back is no longer through the sky.

For the following reasons, I do not agree with Wood's more upbeat tone that he adopted later in the interview:

"And once (institutions) actually do the homework and see what has happened here," said Wood, "I think they will be more comfortable moving into Bitcoin and perhaps Ether as a first stop, because they will understand it more." "And once (institutions) actually do the homework and see what has happened here," said Wood.

Understanding Bitcoin better has also helped me realize that it still trades as an asset with an incredibly high level of risk, despite the fact that the climate in which it operates is no longer one with zero interest rates. The reality that Bitcoin is not yet in a position to act as a credible inflation hedge is something that asset managers will come to terms with. While the long-term goal may be for Bitcoin to take on this role, this is not the case right now.

Everyone who has worked with cryptocurrency this year has been left with a foul taste in their mouth as a result. The FTX scandal is simply the most recent scandal to humiliate the business, while the rest of the world looks on with a mix of superiority, sorrow, and disdain. In light of all of these circumstances, the reputation of the entire area has suffered a significant hit.

And if interest rates continue to climb, a cost of living problem continues to escalate, and data continues to indicate towards an economy that is failing, it will take a bit longer to resume the crypto party than Cathie believes it will.

This article was first published in CoinJournal. The post Even Cathie Wood acknowledges institutional adoption of cryptocurrency will taper off appeared first on CoinJournal.