Key Points
- ARK Invest acquires 41,032 shares of Coinbase amidst tech stock dip and Bitcoin’s decline.
- The purchase comes after ARK Invest sold $4.3 million worth of COIN stocks in late December.
ARK Invest, a renowned asset management firm, has increased its stake in the cryptocurrency exchange, Coinbase, amidst a drop in tech stocks and a decline in Bitcoin to its lowest in months.
The firm’s latest acquisition includes 41,032 shares of Coinbase Global Inc. (COIN), valued at $9.3 million. This move comes roughly two months after ARK Invest, led by Cathie Woods, sold $4.3 million worth of COIN stocks in late December.
ARK’s Investment Strategy
The investment was made through the ARK Next Generation Internet exchange-traded fund, a product that aims for long-term capital growth by primarily investing in domestic and foreign equity securities of companies relevant to the fund’s investment theme of next-generation Internet.
ARK Invest’s decision to buy came as Coinbase shares were struggling. As reported, COIN shares fell over 5% after BofA Securities reduced its price target from $363 to $311, citing increasing competition and revenue pressure.
Analysts have suggested that traditional financial companies entering the cryptocurrency space could impact Coinbase’s transaction revenue, which is its main income source.
Coinbase and Market Conditions
As of the latest data, COIN closed at $212.49 on Feb. 25, down 6.42% for the day and over 20% in the past week.
Coinbase stocks also faced challenges as the cryptocurrency market experienced instability, with billions in liquidations over $1 billion in the past 24 hours. This was triggered by the announcement of new tariffs on imports from Canada and Mexico, along with a 10% tariff on Chinese goods.
Investors expressed concern that rising costs could fuel inflation and bring more economic uncertainty, pushing tech stocks and risk assets like Bitcoin lower.
Bitcoin dropped 3.5% on the day to $88,534, a level not seen since November of the previous year. The total crypto market capitalization also slipped 3.2% during the same period to $3.04 Trillion. Meanwhile, the tech-heavy Nasdaq Composite slid 1.35%.
ARK’s Confidence in Coinbase
Despite these challenges, ARK Invest appears bullish on Coinbase. This optimism is likely due to the company’s stronger-than-expected Q4 earnings, which represented a 138% increase from 2023 and surpassed the $1.88 billion estimate from LSEG analysts.
In addition, the U.S. Securities and Exchange Commission has dropped its lawsuit against Coinbase, which was one of the commission’s most significant crypto-related enforcement actions under former chair Gary Gensler.
In a related move, ARK Invest also sold 98,060 shares of the ARK 21Shares Bitcoin ETF (ARKB) from its ARKW fund. This sell-off was valued at approximately $8.6 million based on the ETF’s closing price of $87.86 on Tuesday.