ARK Invest Doubles Down on Coinbase Amid Crypto Rout

ARK Invest, a prominent investment firm led by CEO Cathie Wood, has made a significant move in the cryptocurrency market by purchasing a substantial block of Coinbase shares, even as crypto prices have tumbled to multi-month lows. The firm acquired 41,032 shares of Coinbase Global Inc. (COIN) valued at approximately $9.3 million through its ARK Next Generation Internet exchange-traded fund (ARKW).

This purchase comes at a time when the crypto market is experiencing heightened volatility. Bitcoin, the world's largest cryptocurrency, was trading at $88,534, down 3.5% on the day and hitting levels not seen since November 2023. The overall cryptocurrency market capitalization also decreased by 3.2% to $3.04 trillion during the same period.

Coinbase shares have faced pressure recently, closing at $212.49 on February 25, which represents a 6.42% drop for the day and more than 20% decrease over the past week. BofA Securities further added to market concerns by reducing its price target for COIN from $363 to $311, citing increasing competition from traditional financial firms entering the cryptocurrency space.

Despite these challenges, ARK Invest's decision to increase its Coinbase holdings may reflect confidence in the exchange's fundamentals. Coinbase recently reported stronger-than-expected fourth-quarter earnings for 2024, showing a 138% increase compared to 2023 and exceeding the $1.88 billion estimate provided by LSEG analysts.

Another positive development for Coinbase has been the U.S. Securities and Exchange Commission's decision to drop its lawsuit against the company. This lawsuit had been one of the commission's largest crypto-related enforcement actions under former chair Gary Gensler, and its dismissal removes a major regulatory concern that had been hanging over the company.

In what appears to be a rebalancing of its crypto exposure, ARK simultaneously sold 98,060 shares of its own ARK 21Shares Bitcoin ETF (ARKB) from its ARKW fund. This sale was valued at approximately $8.6 million based on the ETF's closing price of $87.86 on Tuesday.