TL;DR Breakdown
- Cathie Wood’s ARK Invest has sold a substantial part of its Coinbase holdings as the cryptocurrency exchange’s stock reaches near one-year highs, continuing a trend of liquidating Coinbase stocks during rallies.
- Wood remains optimistic about Coinbase despite the sell-off, citing a recent court ruling favoring Ripple as a positive sign for crypto exchanges.
- However, Berenberg Capital Markets analysts warn that regulatory issues are far from resolved for crypto exchanges, highlighting potential vulnerability for products like Coinbase Earn to be classified as securities.
Description
ARK Invest, the growth-focused fund steered by Cathie Wood, continues to offload shares of the crypto exchange giant, Coinbase, even as the stock soars to just shy of its one-year peak at $105.55. A recent disclosure reveals that ARK has shed 248,838 shares of Coinbase (COIN), worth just over $26 million. This follows ARK’s earlier … Read more
ARK Invest, the growth-focused fund steered by Cathie Wood, continues to offload shares of the crypto exchange giant, Coinbase, even as the stock soars to just shy of its one-year peak at $105.55. A recent disclosure reveals that ARK has shed 248,838 shares of Coinbase (COIN), worth just over $26 million. This follows ARK’s earlier sell-off of 480,000 COIN shares worth $50.5 million on July 14 and $12 million the previous week.
This divestment comes amidst a successful rally for Coinbase, which started 2023 at $33.60 per share. As of the latest data, COIN shares have swelled by over 184% since the year’s start. Despite the healthy performance, ARK’s trimming is a strategy for profit-taking and capital reallocation to underperforming assets, as Wood explained in an interview with Bloomberg Daybreak Asia. Furthermore, Wood disclosed that ARK has written down its stake in Twitter by 47% since Elon Musk privatized it last year.
Cathie Wood optimistic despite regulatory uncertainties
While ARK is selling, Wood remains upbeat about Coinbase’s prospects. She expressed optimism following Ripple‘s partial win against the Securities and Exchange Commission (SEC) on July 13. Though the court ruling didn’t deliver a complete victory for Ripple, Wood perceives it as largely favorable for crypto exchanges. The court’s decision that XRP tokens sold to retail investors were not securities could potentially set a precedent for Coinbase and Binance, who are in their respective legal tussles with the SEC.
Despite Coinbase receiving a Wells notice and an SEC lawsuit earlier this year, the share price has displayed resilience without plunging to new lows. This suggests a robust perception of Coinbase’s stock value, further buttressed by the recent Ripple verdict.
However, not all analysts share Wood’s enthusiasm. Berenberg Capital Markets cautioned that the regulation landscape for crypto exchanges still holds considerable uncertainties. Their lead analyst, Mark Palmer, specifically pointed to Coinbase Earn, a product offering yield on crypto staking. He remarked that this product appears “particularly vulnerable” to being defined as a security, given Judge Analisa Torres’ comments in the Ripple case ruling.