Recently, Cathie Wood restated her demand for a $1 million Bitcoin price and increased the equity holdings of Coinbase Global in her fund. Is this in line with what analysts predicted?
Cathie Wood, the CEO and chief investment officer of ARK Invest, recently spoke with Bloomberg about the motivations behind the decision of the Ark Innovation (ARKK) fund to increase its holdings in Coinbase (COIN) shares in the wake of the Securities and Exchange Commission’s (SEC) lawsuit against Binance, one of Coinbase’s main rivals.
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According to the statements, ARKK acquired roughly 330,000 COIN shares on June 6, 2023 for a cost of about $17 million at the time. Ark Fintech Innovation ETF and Ark Next Generation Internet ETF, two other exchange-traded funds (ETFs) from ARK Invest, also received 35,700 and 53,900 additional shares, respectively, valued at $1.8 and $2.8 million.
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The total investment held by ARK Invest in Coinbase, with average entry prices ranging from $272.75 to $282.93, is currently valued at $1.77 billion. However, COIN’s current trading price is $53.90, which has resulted in substantial losses for the fund thus far.
Related: ARK Invest’s Cathie Wood Bets Big on Crypto with $19.9M Block Purchase
The reason for Wood’s strong outlook on Coinbase is that she thinks SEC enforcement measures will make Coinbase the leading cryptocurrency exchange in the US. This supposition is predicated on the belief that Coinbase would prevail in its legal dispute with the SEC.
Wood emphasizes that there are distinctions between the accusations made against Coinbase and Binance. Although the SEC is suing both exchanges for trading and staking unregistered securities, Binance may face more serious sanctions.
The U.S. regulator for derivatives filed a civil enforcement case against Binance CEO Changpeng Zhao, better known as CZ, and three of the exchange’s affiliates in March. Commodity Exchange Act and several Commodity Futures Trading Commission regulations are allegedly violated, according to the lawsuit.
Wood claims that Coinbase is unrelated to these specific accusations. She therefore thinks Coinbase will survive the crisis and triumph, leaving its greatest rival in the dust.
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It’s possible that COIN is the finest and soon to be the only choice among American cryptocurrency exchanges. However, the price of COIN may or may not increase on its own.
The reasons behind Wood’s conviction on COIN are still up for dispute. While some analysts agree with her viewpoint, others disagree. With an average price objective of $58.49, analysts’ consensus rating on the stock is Hold, suggesting a possible upside of almost 12% from the firm’s current levels.
Could Coinbase Face Criminal Charges for Securities Violations?
It’s crucial to remember that Coinbase is now the target of legal action brought by the SEC over the trading and staking of unregistered securities. It’s possible that Coinbase will be determined to have engaged in criminal activity as a result of this legal action.
The claim that Coinbase may have invested in projects before they were listed on the exchange, which raises concerns about possible insider trading, is, however, far more worrisome than the SEC enforcement actions.
Following CEO Brian Armstrong’s interview with The Wall Street Journal on June 10th, rumors regarding Coinbase’s internal procedures started to circulate. When questioned about Coinbase’s interests in tokens featured on the site during the interview, Armstrong gave an evasive answer.
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It is well known that a new token’s price frequently drops significantly once it is posted on Coinbase. If a coordinated pump-and-dump strategy caused this pattern, it may be considered a significant financial crime.
The key question is still: Is there actual proof to back up such a serious charge? The allegations are now based on conjecture and market observations rather than specific evidence,
thus the answer is both YES and NO.
Related: Cathie Wood’s ARK loading up on Coinbase shares again, buying $18M
Bitcoin reaching $1 million?
Wood reiterated in her interview with Bloomberg that “Bitcoin is a hedge against inflation.” She did, however, also voice her worries about the potential for further deflation. Despite this, Wood maintains her $1 million goal and is upbeat about the price of bitcoin.
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A golden cross, which happens when the 50-day exponential moving average (EMA) surpasses the 200-day EMA, occurred in February for Bitcoin. The Chaikin money flow and current trading volumes both point to a drop, which raises the probability of short-term sideways trading.
According to Wood, Bitcoin may still do well even in a deflationary climate since it serves as a “antidote to counterparty risk in the traditional financial system.”
Her thesis is somewhat supported by the fact that three of the four worst bank collapses in American history have occurred in the previous three months, indicating potential flaws in the established financial system.
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It’s also important to remember that the next Bitcoin halving will occur in less than a year.