In a bold testament to the unpredictable dynamics of cryptocurrency markets and its related stocks, the value of Coinbase Global Inc. has more than doubled this year despite intense regulatory scrutiny.
The cryptocurrency exchange’s resilient performance seems to have caught the attention of the market, notably Cathie Wood’s Ark Investment Management LLC. On Tuesday, Ark Innovation ETF, Wood’s flagship fund, sold 135,152 Coinbase shares – the first such move since July 26 of the previous year. The market is viewing this move as a potential signal to investors to consider realizing profits after the stock’s impressive rally.
Wood’s strategic move amid Coinbase’s surge
According to data compiled by Bloomberg, Ark Investment Management has been the fourth-largest holder of Coinbase stocks, steadily adding to its stake during crypto-market volatility over the past 11 months. It has built on its stake even in the face of industry crises such as US regulatory crackdowns, the collapse of Sam Bankman-Fried’s crypto empire, and numerous bankruptcies in the sector.
However, the sale on Tuesday coincides with a robust 9.8% rally for Coinbase following an optimistic filing by the Chicago Board Options Exchange (CBOE). The CBOE filing fuels hope for potential US approval of a Bitcoin ETF, which could further validate the crypto market.
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The rise of Coinbase amid challenges
The resilience of Coinbase has been noteworthy in 2023. Despite facing a lawsuit from the US Securities and Exchange Commission (SEC), the company has seen its stock rise by over 150%, outperforming a broader rally by cryptocurrency-linked stocks. The firm’s stock, which dropped by 86% last year, has now added more than 50% to its value since the SEC filed against the firm for allegedly offering unregistered securities.
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The dramatic turnaround of Coinbase stock mirrors the success of Wood’s Ark Innovation ETF. The fund has risen by 51% this year, compared to a 38% gain for the Nasdaq 100 Index, and a 16% advance for the S&P 500.
The future outlook for Coinbase and Ark Innovation ETF
The recent market movements imply a positive future for Coinbase and the broader cryptocurrency industry. Insider sources have revealed that key figures at Coinbase, such as CEO Brian Armstrong, are capitalizing on this uptick, collectively selling 88,058 shares to the tune of roughly $6.9 million.
Furthermore, the development on July 11th by Cboe Global Markets has added to the positive outlook for the industry. The exchange operator amended five spot Bitcoin ETF applications to include a surveillance-sharing agreement (SSA) with Coinbase.
Despite Wood’s recent reduction in Coinbase holdings, her belief in the cryptocurrency sector remains steadfast. She continues to forecast that Bitcoin could reach a staggering $1 million per coin in the future, as she reiterated on June 19.
The crypto market is complex and often unpredictable, as evidenced by the recent performance of Coinbase stocks amid intense scrutiny. Ark’s strategic move to reduce its Coinbase stake after an extended period of accumulation serves as an interesting insight into its approach. As the market continues to develop, it will be intriguing to see how major investors like Wood react and strategize in response to evolving trends.