ARK Invest Continues Buying Coinbase Stock
ARK Invest, the investment management firm led by Cathie Wood, has increased its exposure to Coinbase by over 700,000 shares so far in 2023.
The fund made this move despite concerns over the bankruptcy of Silvergate bank, a major Coinbase partner.
ARK purchased another 47,568 shares of Coinbase on March 7, bringing the total number of shares held by the firm’s ARKK exchange-traded fund (ETF) to around 6 million. This is the third time ARK has bought more shares in just one week.
The move is in line with ARK’s fearless approach to the crypto space, with Wood known for bucking the trend and increasing exposure to assets such as Coinbase even during the 2022 bear market. ARK has continued to buy shares even as the price of COIN has dropped from local highs of $87.50 to current levels of $61.69, a decrease of almost 30% in just over a month, according to data from TradingView.
In a recent edition of its weekly newsletter, ARK hinted at its rationale for the purchases, voicing excitement at Coinbase’s announcement of its Ethereum Layer-2 network, Base.
“In our view, Coinbase’s decision to build and integrate its services into a decentralized crypto infrastructure highlights its deep alignment with the fair, transparent, and accessible financial services that public blockchains aim to offer,” the firm wrote.
ARK’s cost basis for Coinbase shares is currently $254 per share, far more than its current value. However, the firm is taking a long-term view on its investment in Coinbase, citing the potential financial benefits of the company’s Wallet serving as a trusted on-ramp and access point to applications on the network as it scales.
Along with Coinbase, ARK also owns 5.53 million shares of the Grayscale Bitcoin Trust (GBTC), the largest Bitcoin institutional investment vehicle.
GBTC has been struggling to launch as an ETF in the United States, with a court currently deciding on whether the Securities and Exchange Commission has the right to continue denying the launch of what would be the market’s first Bitcoin spot ETF. GBTC shares remain at a discount to the Bitcoin spot price, with its shares trading at an implied price nearly 50% lower than BTC/USD, per data from monitoring resource Coinglass.
Despite these challenges, ARK continues to hold a significant position in GBTC, having last increased its exposure to the asset in November 2022, immediately after the FTX debacle broke. In January 2023, the firm reduced its holdings by 500,000 shares.
In summary, ARK Invest is taking a long-term view on its investments in the crypto space, continuing to hold and increase its exposure to assets such as Coinbase and the Grayscale Bitcoin Trust, despite short-term fluctuations in price and regulatory challenges.
The firm’s fearless approach to investing in the crypto space aligns with Cathie Wood’s reputation as a visionary investor unafraid to take risks in pursuit of long-term gains.