Ark Invest Dives into Coinbase Amid Crypto Sell-Off

Ark Invest, the investment management firm led by Cathie Wood, has made a significant move in the cryptocurrency market amid a broad sell-off. On Tuesday, Ark purchased approximately $8.7 million worth of Coinbase (COIN) shares, marking its first acquisition of Coinbase stock since October 8, 2024. Simultaneously, Ark sold $8.6 million of its own spot Bitcoin ETF (ARKB).

This strategic move comes as both Coinbase shares and Bitcoin have experienced sharp declines. Coinbase shares have dropped approximately 38% from their peak, while Bitcoin has fallen 19%, exacerbated by the latest sell-off in the crypto market. On Tuesday, Coinbase closed down 6.4% at $212.49, leaving it down 17% year-to-date. However, COIN showed signs of recovery with a 2% gain in pre-market trading on Wednesday.

Ark's investment strategy mandates that no single holding exceeds 10% of any fund's portfolio, ensuring diversification. If Coinbase stock continues to fluctuate, Ark may further rebalance its holdings. As of February 25, COIN represented 5.5% of the ARKW fund, valued at roughly $94.4 million. Coinbase's market capitalization currently stands at $39.5 billion.

While increasing exposure to Coinbase, Ark offloaded 98,060 shares of its ARKB ETF from the same fund—its first significant ARKB sale since September 2023, when it sold 44,609 shares worth $2.8 million. Despite the recent sale, ARKB remains ARKW's largest holding with a 10.7% weighting, valued at approximately $182.2 million. Other top positions in the fund include Tesla, Roku, Roblox, and Robinhood.

The asset reallocation comes amid significant market volatility. Bitcoin plummeted 10% over the past two days before stabilizing slightly. U.S. spot Bitcoin ETFs witnessed heavy outflows, with $539 million exiting on Monday and a record $1 billion on Tuesday. Altcoins fared worse: Ether (ETH) dropped 18%, XRP fell 19%, and Solana (SOL) lost 22% before finding