By
Bhushan Akolkar
May 21st, 2024
This latest sale also follows the pattern of ARK Invest of closely monitoring not only the price of the assets it holds but their value compared to other assets.
A few weeks ago, we reported that the value of Coinbase Global Inc (NASDAQ: COIN) shares took a hit after Cathie Wood’s ARK Invest sold over $40 million worth of it. Now, we are seeing a repeat of the situation as the same company recently sold another $25 million worth of Coinbase stock.
This sale took place on January 3, 2024, and was completed through two of its exchange-traded funds (ETFs).
Details about the ARK’s Sale of Coinbase Stock
As per official reports, the company sold 166,183 COIN shares which were valued at roughly $25.3 million at the time. The shares were sold from the company’s Innovation ETF (ARKK) and Next Generation Internet ETF (ARKW). 145,048 of the shares sold came from the former while the rest came from the latter.
In the past, we’ve seen the value of Coinbase shares drop after the company made a huge sale and this time was no different. Coinbase shares saw a 2.96% drop by the end of the trading day and were valued at roughly $152.24 each.
This latest sale also follows the pattern of ARK Invest of closely monitoring not only the price of the assets it holds but their value compared to other assets. As a rule, ARK does not allow any single asset to comprise more than 10% of the total value of their funds. The price of COIN has spiked several times in the last few years and inevitably, the 10% rule is breached.
When this happens, ARK Invest sells some of the Coinbase stock to re-balance the scales and this is what has happened yet again. Additionally, Coinbase’s stock has always bounced back after a slight sell-off-induced dip.
How the Bitcoin ETF Could Follow a Similar Trajectory
While ARK’s share sell-off made big news in the industry, there is still no bigger story than the possible Bitcoin ETF that seems to be a shoo-in. Should BlackRock succeed, it is believed that other firms in the space will successfully launch ETFs. And coincidently, Coinbase itself is the crypto asset custodian for BlackRock.
It is possible that once Bitcoin ETFs are launched, similar aggressive sell-offs could rock the market price of the token. And this isn’t even considering other cryptos that could get their own ETFs like Ether. It has always been clear that ETFs will change the state of the crypto industry but the reality is fully setting in.
Coinbase’s shares have always recovered even after massive sell-offs so perhaps the same resilience can be expected of cryptos like Bitcoin. As we draw closer to a decision by the SEC on BlackRock and other firms’ applications, these questions should be answered.