• Ark Invest purchased 53,708 Coinbase shares worth $8.4 million across three ETFs during a period of market volatility.

  • Coinbase now ranks as the fourth-largest holding in Ark's Innovation ETF, with a 6.5% weighting valued at around $355 million.

  • Coinbase shares dropped 5% after the U.S. debate but recovered slightly, closing down 0.8% at $157.15; Ark sees long-term potential.

By investing $8.4 million on 53,708 Coinbase shares on Wednesday, Ark Invest made a big move. This purchase was made after Tuesday night's U.S. presidential debate, when the cryptocurrency market was experiencing increased market volatility. 

Notably, the investment company, under the leadership of Cathie Wood, demonstrated its ongoing interest in the cryptocurrency market by adding the shares to three of its exchange-traded funds (ETFs).

https://twitter.com/ArkkDaily/status/1834020304265617552 Ark Invest’s Strategic Allocation

Consequently, the majority of the purchase went toward Ark Invest's flagship fund, the Innovation ETF (ARKK), which has 38,475 shares valued at $6 million, according to trade filings. Additionally, 9,349 shares worth $1.5 million were added to the Next Generation Internet ETF (ARKW), and 5,884 shares worth $925,000 were added to the Fintech Innovation ETF (ARKF). 

Hence, this marks Ark's first purchase of Coinbase shares since the beginning of August, when the company purchased $21.8 million worth of the stock at a low point in the market. A diversified portfolio is guaranteed by the company's policy of not allowing any one holding to account for more than 10% of its ETFs. Ark's approach enables rebalancing in the event of a large increase or decrease in a stock's value. 

Furthermore, with a 6.5% weighting and a market value of about $355 million, Coinbase shares are now the fourth-largest holding in the ARKK ETF as of September 12. Additionally, at 5.1% and $67 million in value, the stock is the sixth-largest holding in the ARKW fund; at 7.3% and $60 million in value, it is the second-largest holding in the ARKF fund.

Market Reaction to U.S. Presidential Debate

Notably, the purchase was made at a time when the market was reacting sharply to Donald Trump and Kamala Harris's first debate. According to analysts, the discussion set off a "sell-the-news" event that made cryptocurrency assets less risky. 

On Wednesday, Coinbase's stock dropped 5% at first but then bounced back, ending the day down 0.8% at $157.15. Following the debate, Bitcoin saw a 2.6% decrease, falling from $57,700 to $56,100 in the hours that followed. This was partially brought about by the general consensus in the market that Trump's performance fell short of expectations, creating market uncertainty.

Ark Invest's Confidence in Crypto

Therefore, Ark Invest's decision to raise its Coinbase holdings indicates a strong belief in the long-term potential of the cryptocurrency industry, even in the face of a wider market downturn. The stock of Coinbase has increased 92% over the last 12 months, but it has fluctuated this year, with a 9% negative return for 2024 thus far. Coinbase shares are currently trading at $160.55, up 2.2% as of pre-market trading.

Additionally, Bitcoin demonstrated tenacity as well, rising from its decline to trade at $58,240. Given his supportive views of the crypto space, analysts think a Trump win might be good for the market. Together with its strategic rebalancing, Ark's investment decisions show that the company sees value in market downturns and is setting itself up to profit from future expansion in the cryptocurrency industry.

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