Investment management firm Ark Invest bets heavily on shares of US crypto exchange Coinbase.
Investment management firm Ark Invest ups its bet on Coinbase with a recent stock purchase. In this way, the financial group led by Cathie Wood becomes one of the main supports of the exchange in bearish moments. The crypto company faces numerous regulatory issues in the United States.
Recently, a new episode was known that negatively affected this digital currency trading exchange. A shareholder accused several board members of using inside information to sell shares and avoid losses. This fact added to the pressure that for weeks has directed the company’s actions on the red path.
Thus, during the recent days on the stock market, the company’s shares continued in negative. That reality dates back to the Securities and Exchange Commission (SEC) actions against the firm. Despite such a weight, Wood’s firm remains optimistic and has not stopped buying COIN shares in recent months.
Why is Ark Invest Betting on Coinbase Stock?
Ark Invest’s bet on Coinbase is one of the riskiest among the adrenaline strategies of that firm’s funds. Wood considers the digital currency exchange platform, DeFi services, and NFT trading, an excellent option for the future. In his opinion, the shares of this company are at a circumstantial discount price.
In this sense, on May 1 it was learned that the company had invested $8.5 million dollars in shares of the exchange, according to CoinTelegraph. This amount totaled some 168,869 shares at the price at that time, which were distributed in 129,604 shares for Ark Innovation exchange-trade Fund (ETF). Another 15,809 shares were sent to the Fintech Innovation ETF.
It is important to note that in April Ark’s purchases of shares of the exchange were considerable. The figure reported above represents barely 50% of the investments in COIN that month. In April, Wood’s firm bought some 304,300 shares of the crypto trading exchange, which is equivalent to purchases valued at $17.5 million dollars. In March, however, the gamble had been much bigger, with 2.4 million shares bought for $117 million.
Ark’s bet on Coinbase would be with its sights set on the long haul. The firm sees that in a considerable period of time, there will be clear regulation in the US, and COIN is one of the best prepared for when that moment arrives.
COIN Faces a Wall of Adversity
The Bitcoin price is more than 50% below its 2021 peak due to winter last year. The latter is just one of the problems that hit the company that Brian Armstrong runs. The SEC appears to be ruthless in its onslaught against this and other centralized digital currency trading companies.
The bankruptcies of major platforms in 2022 generated great user distrust of exchanges. Many prefer to keep their funds in self-custody wallets and leave only what they are willing to spend on centralized platforms. Naturally, the latter is not good for exchanges, which need user funds to maintain their business schemes.
In April, COIN shares plummeted by more than 20% from $72 to $50 per share unit. Currently, the stock price of this firm is $50.93 per share. Under these circumstances, Ark Invest is betting on a Coinbase recovery that will bring great returns.
In 2022, Wood’s company focused on the technology sector, suffered a major disaster. However, it was a reality that few stock assets were able to escape.
By Audy Castaneda
