ARK appears unfazed by Silvergate as it increases exposure to Coinbase (COIN) by more than 700,000 shares in 2023.
ARK ETF continues to replenish Coinbase stocks
US Bitcoin exchange Coinbase has remained a ‘firm buy’ for ARK Invest throughout the recent price drop. The latest data shows that ARK continues to buy Coinbase shares despite concerns about the bankruptcy of Silvergate Bank, a major Coinbase partner.
In the latest demonstration of its fearless approach to the crypto space, ARK bought another 47,568 shares of Coinbase on March 7.
This is in addition to the approximately 6 million shares already held in ARK’s ARKK Exchange-Traded Fund (ETF) at the beginning of the month. It’s already the 3rd purchase of the week.
Coinbase has been under pressure since early February. The online platform fell from local highs of USD 87.50 to its current level of USD 61.69. This is down nearly 30% in just over a month, according to data from TradingView.
Silvergate has accelerated a new investigation into crypto exchanges in particular. However, neither ARK nor its CEO Cathie Wood, who is known for bucking the trend and increasing exposure to assets like Coinbase, are fazed. Not even during the bear market of 2022.
In a recent edition of its weekly newsletter released Feb. 27, ARK hinted at its rationale. Here he expressed excitement over Coinbase announcing 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 provide. While it won’t be drawing transaction revenue from Base at launch, Coinbase will likely benefit financially if its Wallet serves as a trusted ramp and entry point to applications on the network as it scales.
BTC Inches Up as Bitcoin ETF Battle Goes to Court
Grayscale Bitcoin Trust (GBTC), Bitcoin’s largest institutional investment vehicle, is also benefiting this week.
Amid times of crisis for owner Grayscale in its long-running battle to convert and launch GBTC as an ETF in the United States, the trust saw modest gains in value early in the week.
A court is currently deciding whether the US regulator, the Securities and Exchange Commission, has the right to continue to deny the launch of the first Bitcoin spot price ETF on the market.
GBTC remains close to a record discount to Bitcoin’s spot price. The shares are trading at an implied price nearly 50% lower than BTC/USD, according to data from the monitoring source Coinglass. As always with the ETF story, criticism remained. Statistician Willy Woo argued the following on March 8:
The ETF approval would dump the price of BTC and inflate the ETF. The pent-up selling pressure on GBTC that accumulated during the bear market (as reflected in the GBTC discount) would be released into the open market.
ARK, meanwhile, owns approximately 5.53 million GBTC shares. Greater exposure was last made in November 2022, immediately after the FTX debacle erupted. In January, it reduced its holdings by 500,000 shares.