ARK Invest's flagship fund is outpacing the decline seen during the dot-com bubble burst and a long-term recovery will be difficult for 2 reasons

DataTrek Research said in a Wednesday note that the decline could get worse from here for two reasons.

Since it's all-time high, the ARK Invest's Disruptive InnovationETF has plummeted. The decline for the Nasdaq 100 in the days after its March 10, 2000 peak was more than six times larger. The peak-to-trough decline of the index was 80%.

DataTrek co- founder Jessica Rabe believes that the flagship fund of Ark Invest has yet to find a bottom and could continue its decline. The Ark Invest Exchange Traded Fund would go to $34 if there was a repeat of the Nasdaq's decline. On Tuesday, the exchange traded fund closed at $35.65.

The recovery of Cathie Wood's multi-billion dollar fund may be hampered by a different macro environment and the fact that ARK Invest is not the same beast as the Nasdaq 100 was during its decline.

There are two important differences that will challenge investors in the future.

This is the first thing. The interest rates are going up.

Rabe said that the Fed is raising rates more than it was cutting at the time. Higher interest rates are not good for unprofitable growth stocks that Ark Invest owns.

The Fed cut interest rates in 2001 due to a slowing economy and the aftermath of the 9/11 terrorist attacks. The Fed is trying to tame inflation by raising the interest rate.

There are two ARK Invest is managed by a team of investment professionals.

"ARKK is an actively managed and very concentrated portfolio with large weights in many speculative tech names," Rabe said, noting that three of its top 10 holdings made 52-week lows on Tuesday.

Over the past year, none of ARK's holdings have generated a positive return, and its best performing stock isTesla, which is down 21%

Many high-quality and established tech stocks were held in the early 2000s by the Nasdaq. Rabe said that "whether or not T DOC and SQ succeed over the next decade is a much more difficult call than Microsoft or Apple in the early 2000s."

"ARKK will most likely trough at lower levels on a percentage basis and rebound more slowly than the NASDAQ in the early 2000s because it doesn't own as many large, seasoned companies."

According to fund flows, investors have been buying the dip in the speculative tech fund.

According to data from VettaFi, the ARKK exchange traded fund has seen over a billion dollars in new money this year.