Crypto Slumps, ARK Buys In: Big Bets on Foundational Players

Cathie Wood's ARK Invest has intensified its focus on crypto-related equities, purchasing significant stakes in Coinbase Global, Circle Internet Group, and Bullish amid a broader market downturn. The firm's ARK Innovation ETF (ARKK) and ARK Fintech Innovation ETF (ARKF) acquired $3 million in Coinbase shares and $3.1 million in Circle shares on Tuesday, with ARKF also adding $1.1 million in Bullish, according to a trade filing. These moves follow a series of recent purchases, including $10.2 million in Bullish shares on Monday and $7.28 million in Bullish alongside $15.56 million in Circle and $8.86 million in BitMine last week as reported.

The purchases occurred as Coinbase and Circle shares remained relatively flat, with Coinbase closing down 0.82% at $261.79 and Circle inching up 0.013% to $76.60 according to market data. Meanwhile, Bullish, backed by billionaire Peter Thiel, is set to release its third-quarter results, with analysts expecting $72.39 million in revenue-a 26% increase from the prior quarter according to analyst projections. Despite recent gains in adjusted revenue and net income, Bullish shares fell over 5% following its Q3 report, trading below its August IPO price as reported.

ARK's accumulation of crypto-linked stocks aligns with broader market dynamics. Circle, for instance, reported $740 million in Q3 revenue and $214 million in net income-up 66% and 202% year-over-year, respectively-while expanding its Arc blockchain platform according to Q3 earnings. Analysts from William Blair and Bernstein have upgraded the stock to "Outperform," citing its leadership in stablecoin infrastructure as noted. Similarly, ARK's $30.5 million purchase of Circle shares in one session underscored its confidence in the firm's long-term potential despite a 12% stock decline post-earnings as reported.

The renewed crypto bets come amid a challenging macroeconomic environment. Bitcoin and Ethereum prices have plunged, with Bitcoin trading below $90,000-a seven-month low-and broader crypto markets grappling with regulatory uncertainties and Fed rate-cut expectations according to market analysis. ARK's strategy to "buy the dip" reflects its belief in the sector's resilience, as seen in its $5.8 million investment in BitMine and $2.9 million in Bullish on Friday, despite both stocks falling over 6% as reported.

The firm's moves also coincide with growing institutional interest in crypto infrastructure. Canary Capital, for example, launched a record-breaking XRP ETF, while Kraken-another major player-secured $800 million in funding at a $20 billion valuation and is preparing for an IPO as reported according to financial reports. These developments highlight crypto's evolving role in mainstream finance, despite ongoing volatility.

ARK's latest purchases suggest a strategic pivot toward crypto's foundational players. "We see Circle as a clear leader in a winner-take-most market," wrote William Blair analysts, emphasizing the firm's dominance in stablecoin infrastructure according to analyst commentary. As Bullish and other exchanges expand into tokenization and institutional services, ARK's bets could signal a broader shift in investor sentiment-despite the current market slump.