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Here’s why Cathie Wood’s Ark dumps Coinbase stock just as it’s rising

Here’s why Cathie Wood’s Ark dumps Coinbase stock just as it’s rising
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Cathie Wood's fund made its first Coinbase sale in almost a year this week.
  • Cathie Wood’s Ark Invest sold $12 million worth of Coinbase shares this week.
  • The asset manager’s sales are closely watched, but left some scratching their heads.
  • Coinbase has rallied after a frenzy of Bitcoin ETF applications lifted sentiment.

Any time Cathie Wood’s Ark Invest buys or sells shares of Coinbase — or any other name — people pay attention.

The asset manager is one of the biggest individual holders of Coinbase shares.

Wood’s latest sale, on Tuesday, of just over 135,000 shares raised questions. Namely, why did Wood and several Coinbase executives all sell shares in the past week, just as the stock rallied? Does she know something we don’t?

“This is standard practice,” said James Seyffart, a Bloomberg Intelligence ETF analyst. “Cathie Wood sells her stocks when it goes above a certain weight. So, she constantly buys into collapses and sells into rallies for stocks she likes,” Seyffart wrote on Twitter.

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The practice of rebalancing the weighting in the funds can make it look like Wood is selling winners to buy losers. In reality, it’s all about maintaining the weights of stocks in the fund and avoiding being overexposed.

Ark didn’t immediately respond to a request for comment.

Coinbase defies concerns

The Securities and Exchange Commission brought an enforcement action against Coinbase on June 6. Wood’s firm added around $21.6 million worth of shares that day.

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Shares in the exchange are up around 70% since the charges were filed on June 6. Coinbase shares were changing hands for about $85 shortly after the open in New York.

Coinbase share price since June, via TradingView. Shares price has jumped since SEC action.

Shares in the crypto exchange are up about 135% since January, despite a host of regulatory issues and legal concerns — including the exchange suing the SEC.

Coinbase shares are reaping gains from the recent flurry of spot Bitcoin ETF applications. All new applicants have included the exchange as the pricing partner in surveillance-sharing agreements. The latest attempt to convince the SEC to approve a spot-based product.

Shares in the crypto exchange reached highs last since August 2022 following the news.

The Bitcoin ETF applications buoyed the crypto market throughout June and related equities. Since BlackRock’s June 16 filing, its first attempt at a Bitcoin ETF in the US, the price of the leading digital asset has jumped over 14%.

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The $9 trillion firm’s application was quickly joined by others, such as Fidelity and Valkryie. However, its likely Wood’s firm, in partnership with 21Shares, will be the first to hear back.

Ark Invest amended its latest application to include an SSA with the CBOE, the world’s largest options exchange on June 28. It was later amended again to include Coinbase as part of this SSA.

The asset manager is in a “pole position to be approved first because they filed first,” according to Bloomberg Intelligence ETF analyst Eric Balchunas.

To share tips or information about Ark, Coinbase or another story, please contact me at adam@dlnews.com.