Ark Invest sells $3.9m worth of Coinbase – Why is Cathie Wood offloading COIN shares?

Ark Invest unloaded over $3 million worth of Coinbase shares from the ARKF ETF. The sale occurred after Coinbase recorded a 10% decline after Jerome Powell’s speech. According to the firm, the move aims to rebalance its fund weightings. 

Cathie Wood’s investment manager, ARK Invest, sold over 13,700 shares of crypto exchange Coinbase(COIN) on December 18. According to the firm’s disclosures, the sale was a rebalancing strategy within its Exchange Traded Fund(ETF) ARKF. 

Ark Invest, Coinbase affected by Powell’s speech 

ARK’s Invest offload is reportedly the most significant sale since the firm unloaded over $2 million in September. The firm has previously disclosed its investment strategy to avoid individual holdings exceeding 10% of its ETF total holdings. It disclosed that this is aimed at ensuring the firm maintains a diverse investment portfolio. 

According to ARK’s Invest disclosures, Coinbase currently holds a weighting of 9.9% on its ARKF ETF. It added that Coinbase shares fell slightly behind Spotify’s allocation and have a market value of $110 million.

TradingView revealed that Coinbase’s stock traded at $279.86 on Wednesday, recording an over 10% drop in twenty-four hours. The crypto exchange shares recorded a slight recovery of 3.5% on Thursday amid the overall market volatility. 

The drop was reportedly influenced by the sentiments of the Federal Reserve’s chair at a press conference on Wednesday. The chair commented on the Fed’s decision to reduce interest rates by 25 bps rate cut.

Powell highlighted the Fed had made consecutive rate cuts in 2024 in response to the inflation rate and labor market. However, he warned the Fed had to evaluate several factors in subsequent rate cuts. The Fed chair also cut the outlook for 2025 rate reductions to two, half of what investors predicted. Powell’s move triggered markets as investors responded to the developments. 

Powell comments on Trump’s pro-crypto stance as markets react to Fed’s policy

Powell pointed out in his speech that the USA can not own Bitcoin without Congress passing the relevant legislation. The president-elect of the United States, Donald Trump, pledged during his campaigns that the country would have a Bitcoin reserve as part of his pro-crypto policy. 

On the other hand, Trump indicated that upon assuming office, he would direct the US treasury to acquire one million Bitcoins in five years. 

According to CoinMarketCap, Bitcoin fell by approximately 9% on December 18 in response to the Fed’s chair remarks. The crypto asset traded slightly below the $100,000 mark by the close of business on Wednesday. However, it recorded a slight recovery on Thursday, trading at over $102,419.

Ruslan Lekha, Chief of Markets at YouHolder, a Swiss-based Web3 platform, commented that the Fed policy indirectly impacted the crypto market. He explained that digital assets have been integrated into traditional finance, making them codependent. 

While the administration can directly influence the crypto market through policy decisions and regulatory actions, the Fed’s role is limited to managing monetary policy, which indirectly affects crypto via its impact on liquidity and investor sentiment in the financial ecosystem.

Ruslan Lekha

Despite the overall market downturn, U.S. spot Bitcoin ETFs recorded increased inflows after Powell’s speech. According to Coinglass, the US BTC spot ETF recorded $272.30 million inflows. 

LookonChain data also revealed that corporates such as Marathon Digital (MARA) added over 1600 BTC worth $166 million on Wednesday. Hut 8 Corp (HUT) also revealed it had bought BTC worth $100 million on Wednesday. The energy infrastructure and Bitcoin miners company disclosed it now holds 10,096 BTC worth over $1 Billion in its Bitcoin reserve.