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Cathie Wood’s ARK Invest made headlines recently with its decision to divest more than $24 million in Coinbase (COIN) stock. This move came unexpectedly as Bitcoin was nearing its all-time highs, influencing the crypto market atmosphere. ARK Invest distributed the sale across three of its funds: ARK Innovation ETF (ARKK), ARK Next Generation Internet ETF (ARKW), and Ark Fintech Innovation ETF (ARKF). This decision marked a significant shift in ARK Invest’s strategy, especially when considering Wood’s historically bullish stance on cryptocurrency-related assets.
The divestment had an immediate impact on Coinbase’s market valuation, with the stock dropping 5.2% to close at $216.77 the following Tuesday. This move by ARK Invest reflects Wood’s adjustment to her investment strategy amid the cryptocurrency market’s bullish trend. Since October 2023, the ARKK fund has reduced its holding of Coinbase shares by nearly half, despite the stock rallying approximately 175% during the same period. This strategic reduction from about 7 million shares to roughly 4 million signifies a dramatic shift. The sales also came amid operational challenges for Coinbase, as the platform struggled with increased traffic, resulting in technical issues that affected some users’ transaction experiences disastrously.
This investment pivot coincides with a broader context where Coinbase’s partnership with BlackRock for a Bitcoin ETF application and its selection as a preferred custodian for several newly approved Bitcoin ETFs had previously fueled a surge in its stock value. Despite these positive developments, Coinbase’s stock has faced skepticism. Earlier predictions by Berenberg Capital and a later valuation by JPMorgan hinted at potential declines, something ARK Invest’s recent actions might echo. However, considering the stock remains substantially below its all-time high from May 2021, these maneuvers underscore the volatile and unpredictable nature of cryptocurrency-related investments, and perhaps, a more cautious approach towards the sector’s future.
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