Ark Invest Bets on Coinbase Stock Despite Challenging Outlook

Ark Invest has been buying Coinbase stock for two consecutive days, with Cathie Wood’s company accumulating around $16 million worth in total.

Wood is known for her investments in disruptive technologies such as blockchain. As Coinbase is a digital asset exchange, it has attracted significant investment from Wood’s asset management company, Ark Invest.

Cathie Wood’s Ark Invest Bets Big on Coinbase Stock

Ark Invest bought COIN stock worth over $8 million on Monday through its three exchange-traded funds (ETFs). Wood’s allocation to different ETFs was as follows:

• 129,604 shares worth $6.4 million to Ark Innovation ETF
• 23,456 shares worth $1.1 million to Ark Next Generation Internet ETF
• 15,809 shares worth $790,000 to its Fintech Innovation ETF.

Then, on Tuesday, she invested $7.5 million in Coinbase stock with the following allocation:

• 112,949 shares worth $5.8 million to Ark Innovation ETF
• 20,313 shares worth $1 million to Ark Next Generation Internet ETF
• 13,875 shares worth $712,000 to Fintech Innovation ETF

Brian Armstrong Dumping His COIN Bag

Ark Invest placed the COIN bet despite the fact that Brian Armstrong, the co-founder of Coinbase, sold 59,460 shares worth over $3.5 million last month.

Coinbase is battling with the Securities and Exchange Commission (SEC) over a Wells Notice it received about selling unregistered securities. Moreover, the company wants regulatory clarity from the SEC for the crypto asset class.

Analyst Danil Sereda believes that legal battles are expensive and a prolonged lawsuit can worsen the financial situation of Armstrong’s company.

I assume that the number of shares outstanding will continue to rise steadily as the company continues to generate losses and has to finance itself somehow.

Danil Sereda

Coinbase is also considering moving offshore, where it might also have to deal with competitive challenges. So the question remains: Is Armstrong funding a battle chest by dumping COIN stock?

25% Downside?

In the weekly time frame, COIN is at a support of around $50. The same range is also the neckline of a double top pattern.

If COIN gives a weekly close below $50, it might result in a double top breakdown. Sereda writes, “COIN stock is likely to fall back to its prior supporting lows in the $35-$40 per share range, which is more than 25% below current levels.”

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