The dynamic ARK Invest’s ETF rebalancing approach, coupled with strategic investments in major tech stocks and ongoing engagement with regulatory authorities, reflects the firm’s adaptability and forward-thinking strategy.
ARK Invest, the renowned investment firm led by Cathie Wood, has continued its strategic realignment by selling an additional $20.6 million worth of Coinbase Global Inc (NASDAQ: COIN) shares across three of its Exchange-Traded Funds (ETFs). The latest divestiture follows closely on the heels of a previous sale of 166,183 COIN shares just days prior.
ARK ETFs Allocation Strategy
As highlighted in a recent report, the latest offload comprised 133,823 COIN shares, reducing ARK’s exposure to the crypto exchange. ARK Invest adheres to a strategy where no individual stock should surpass a 10% weighting of an ETF’s value. With COIN more than doubling in price during the last quarter of 2023, ARK’s sales of Coinbase shares have been consistent, aligning with its target allocation strategy.
ARK’s Innovation ETF (ARKK) holds the largest share of Coinbase stock, with holdings exceeding $850 million. The recent sale brings ARKK’s Coinbase weighting down to 10.04%, suggesting a potential slowdown in sales from this particular ETF, unless there is another remarkable surge in Coinbase’s share price.
Meanwhile, ARK’s Next Generation Internet (ARKW) and Fintech Innovation (ARKF) ETFs continue to carry fewer Coinbase shares, but their weightings remain higher at 10.37% and 13.41%, respectively. The diversity across these ETFs allows ARK to adapt its holdings to the crypto market conditions.
The dynamic ARK Invest’s ETF rebalancing approach, coupled with strategic investments in major tech stocks and ongoing engagement with regulatory authorities, reflects the firm’s adaptability and forward-thinking strategy.
Excitingly, Coinbase’s stock has experienced a remarkable 89% rally in the past six months, trading around $153.98 as of the time of writing. This surge can be attributed to various updates, including the company’s expansion in Europe and the recent acquisition of a Virtual Asset Provider (VASP) license in France, enabling it to provide trading and custody services in the region.
Project Diamond, a platform supported by Coinbase for institutional tokenization and trading of real-world assets, is also expected to contribute further to Coinbase’s value. Coinbase anticipates further value appreciation, especially after the potential approval of spot Bitcoin Exchange-Traded Funds (ETFs) by the United States Securities and Exchange Commission (SEC).
This is because many applicants including BlackRock Inc (NYSE: BLK) have named Coinbase as their preferred custodian for the product
Spot Bitcoin ETF Approval Process
In recent weeks, firms seeking approval for spot Bitcoin ETFs have been engaging with the SEC to address concerns. The SEC has been emphasizing a preference for a cash redemption model over the traditional in-kind model. Notable industry players, including Grayscale Investments and BlackRock, have adjusted their strategies to comply with the SEC’s preference.
Key concerns addressed include the redemption model, disclosure of authorized participants, and protocols for handling potential hard forks in blockchain technology. Firms, including Grayscale, have clarified their positions on receiving tokens through hard forks or airdrops, aligning their strategies with SEC expectations.
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