In a significant financial maneuver, Ark Invest has recently divested 13,780 shares of Coinbase, valued at approximately $3.9 million, from its Fintech Innovation ETF (ARKF). This decision followed a noticeable 10% decline in Coinbase’s stock price, triggered by the Federal Reserve’s assertive stance on monetary policy.
One of the Largest Coinbase Stock Sales
This transaction marks one of the most substantial sales of Coinbase stock by Ark Invest since they offloaded shares worth $2.8 million on September 23. Ark Invest’s strategic approach typically involves limiting the weight of any single stock to no more than 10% of an ETF’s portfolio, ensuring a diversified investment strategy. Consequently, Ark may continue to modify its holdings based on Coinbase’s market performance.
Current Position in ARKF ETF
As of December 18, Coinbase represents the second-largest holding within Ark Invest’s ARKF ETF, accounting for 9.9% of the fund. It sits just behind Spotify in terms of portfolio allocation. Currently, ARKF’s Coinbase shares are valued at about $110 million, contributing to the fund’s impressive 54% gain this year.
Federal Reserve’s Impact on the Market
Recently, the Federal Reserve announced a 25 basis point rate cut, aligning with market forecasts. However, the speech delivered by Chair Jerome Powell introduced a more cautious tone, reducing the projected rate cuts for 2025 from four to two. This unexpected pivot unsettled the markets, despite consistent evidence of persistent inflation pressures in recent months.
Coinbase’s stock closed at $279.86 on Wednesday, experiencing a 10.2% drop. The broader cryptocurrency market, including Bitcoin, also felt the impact of Powell’s statements. Bitcoin saw a decline of around 9%, dropping from above $108,000 to below $100,000 at one point before regaining some ground. It is currently trading at $100,470, reflecting a 3% decrease over the past day.
Market Reactions and Legislative Developments
The market responded to Jerome Powell’s assertion that the Federal Reserve cannot own Bitcoin without congressional approval, viewing it as a potential obstacle to former President Trump’s Bitcoin plan. Trump’s strategy, in conjunction with Senator Cynthia Lummis’s proposed bill, seeks to enable the U.S. Treasury to acquire one million bitcoins over a five-year span, bypassing the Fed’s direct involvement.
Bitcoin and Ethereum ETFs Experience Inflows
Despite the prevailing bearish sentiment in the market, U.S. spot Bitcoin ETFs continued to attract significant investments, adding $275.3 million on Wednesday. This influx extended their positive streak to 15 consecutive days, amounting to over $6.7 billion. Similarly, U.S. spot Ethereum ETFs experienced inflows, accumulating $2.5 million and maintaining an 18-day positive streak with nearly $2.5 billion in total.
Future Market Volatility and Long-term Prospects
Looking forward, market analysts predict increased volatility as investors adjust to heightened expectations surrounding Donald Trump’s anticipated presidential run. While the short-term market outlook may exhibit turbulence, experts remain optimistic about the long-term potential of digital assets and financial innovation.
