Insights into Cathie Wood’s Strategic Moves with Coinbase Stocks 📈
This year, Cathie Wood and her investment firm, ARK Invest, have shifted their strategy regarding Coinbase shares after previously selling substantial amounts. This article delves into the changes in their investment approach, taking stock of both the performance of Coinbase on the market and the recent purchases made by ARK Invest.
Cathie Wood’s Strategic Shift: Selling Off Coinbase Shares
In 2023, ARK Invest’s ETFs reached a peak ownership of over 11.3 million shares of Coinbase. However, by year-end, that figure dropped to 9.7 million as substantial sales began to ramp up in December.
As of February 2024, their holdings of Coinbase shares plummeted to 7.2 million. By May, this number had further decreased to approximately 3.5 million, and in August, only 2.5 million shares remained. A steep decline occurred in September, with holdings dropping to below 4,000 shares.
It’s noteworthy that since the time ARK Invest began unloading Coinbase shares, the stock price soared from $105 to $167, indicating a substantial profit on the shares sold, which were predominantly sold at prices exceeding $130.
Coinbase Stock Performance: An Overview 📉
Coinbase made its stock market debut in April 2021, coinciding with a significant peak in Bitcoin’s value, which had surged from approximately $11,000 to $64,000 within six months. However, the initial placement price of $380 was marked by an immediate decline, dropping to around $200 just a month later.
The situation worsened during the bear market of 2022, where the stock’s value fell dramatically, concluding the year just above $30—a reduction exceeding 90% from its initial listing price. It took until October 2023 for the stock price to stabilize above the $100 mark.
It’s reasonable to infer that much of ARK Invest’s earlier acquisition of Coinbase stock happened at prices well below $150. As a result of the market upswing in late 2023, the price of Coinbase shares experienced an uptick, reaching a high of over $280 in March 2024 before settling below $170.
The peak selling activity of Coinbase shares by ARK Invest appeared this year when the price exceeded $170.
Recent Purchases of Coinbase Stocks by ARK Invest 🚀
The ARK FinTech Innovation ETF (ARKF) currently holds the highest proportion of Coinbase shares among Cathie Wood’s funds. In early August, it possessed fewer than 2,000 shares, but recently, the fund made a notable acquisition of nearly 13,000 Coinbase shares, amounting to an investment of around 2.2 million dollars.
As of now, ARKF’s Coinbase shares are valued at over 64 million dollars, making the stock the second-largest in terms of assets under management within the ARKF, following behind Shopify (SHOP). Other ARK ETFs also retain Coinbase shares, including ARKW (ARK Next Generation Internet ETF) and ARKK (ARK Innovation ETF).
ARKW currently holds Coinbase shares worth about 69 million dollars, despite them ranking sixth in share weight within this ETF. Notably, ARK Bitcoin ETF holds the second greatest proportion with over 137 million dollars. Meanwhile, ARKK maintains a substantial holding of Coinbase shares, amounting to approximately 367 million dollars, trailing only Tesla (825 million) and ROKU (634 million) in this fund.
Factors Behind Cathie Wood’s Change in Strategy 🔄
The change in ARK Invest’s approach is evident. Between 2022 and 2023, there was a consistent increase in Coinbase stocks held by the firm, which transitioned to significant sales in 2024.
Despite these sales, the overall transaction closed with profits, as the earlier purchases occurred at prices under $150, while a considerable fraction of the disposals exceeded $170.
Following the realization of these profits, Cathie Wood has reignited her interest in Coinbase shares, purchasing them again at prices ranging from $150 to $190 this year.
Though the exact motivation behind this new interest remains speculative, there is conjecture that Wood anticipates the potential for an upcoming bull market in crypto assets. Should this materialize, the price of Coinbase shares might return to previous highs experienced in 2021. While it can’t be determined that it will reach $380 or even surpass $420, a return to above $200 could be possible.
While certainty is elusive regarding a new bull market, historical patterns show that post-presidential elections in the United States often correlate with a crypto uptrend, a trend evident since Bitcoin’s inception.
As such, this could indicate a new speculative strategy with a focus on medium- to long-term goals, possibly targeting exits in 2025 or 2026.
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