What signal does ARK Invest's increasing stake in Coinbase and reducing its stake in Block send? Why is it so clearly bullish on Bitcoin?

Author: Weilin, PANews

ARK Invest has recently made frequent changes in its holdings of crypto companies: on March 10, it purchased 52,753 shares of Coinbase (US$9.4 million) through the ARKK fund and 11,605 shares of Coinbase (US$2.1 million) through the ARKF fund. On March 14, the company increased its holdings of Coinbase shares worth approximately US$5.2 million through the ARKK fund. These three recent increases in Coinbase holdings totaled US$16.7 million.

It is also worth noting that ARK Invest significantly reduced its holdings in payment company Block, with the three reductions on March 11, March 12, and March 17 totaling approximately US$30.355 million.

At the same time, in this month's market, what is unforgettable is that on March 11, the price of Bitcoin experienced a sharp drop , but the bullish comments of Cathie Wood, founder of ARK Invest at the time attracted widespread attention from the market. The company, which manages $6 billion in assets, said in a report to investors that ARK Invest remains optimistic about the long-term prospects of BTC. Why is ARK Invest firmly optimistic about Bitcoin?

During the U.S. stock market crash, he bought Coinbase shares worth $16.7 million and significantly reduced his holdings in Block

On March 10, as Coinbase's stock price fell 17.6%, Ark Invest purchased 64,358 shares of Coinbase worth $11.5 million. Among them, Ark Innovation ETF (ARKK) purchased 52,753 shares of Coinbase ($9.4 million) and Ark Fintech Innovation ETF (ARKF) purchased 11,605 shares of Coinbase ($2.1 million). In addition, according to transaction documents, ARK Invest increased its holdings of Coinbase through its ARK Innovation ETF (ARKK) on March 13, worth approximately $5.2 million. On the same day, Coinbase's stock price fell 7.43% to close at $177.49. ARK Invest's recent three increases in Coinbase totaled $16.7 million.

As of March 17, Coinbase stock is currently the third largest holding in its ARKK fund, with a weight of 7.11% and a value of approximately $383 million, second only to Tesla and Roku (a U.S. streaming and Internet TV company). ARK Invest previously stated that its goal is to ensure that a single stock position does not exceed 10% of the fund's portfolio.

As of March 17, Coinbase stock is the company's second-largest holding in its ARKF fund, with a weight of 7.35% and a value of approximately $67.17 million, second only to Shopify. In the ARK Next Generation Internet ETF (ARKW), Coinbase's holdings ranked fifth, behind ARK BITCOIN ETF HOLDCO (ARKW), TESLA, Roku, and ROBLOX CORP, with a holding of approximately $86.55 million, accounting for 5.78%.

In terms of reducing positions, ARKW sold 12,881 shares of Block in a transaction on March 17. On March 12, Block announced that it would become the first company in North America to deploy NVIDIA DGX SuperPOD and DGX GB200 systems, marking a major breakthrough in its open source generative AI research and predicting that its performance will be greatly improved. CEO Jack Dorsey expects the system's computing power to increase 30 times from current levels. However, Raymond James analyst John Davis believes that the company's poor fourth-quarter financial performance shows that Block stock "is not for the faint of heart." ARK Invest sold shares on March 17 at $58.65 per share, with a total transaction value of approximately $755,000. From March 11 to March 12, ARK Invest sold a total of $29.6 million worth of Block shares.

Bullish on Bitcoin, which is "the only one that stands out" in the market crash, why does ARK Invest remain optimistic about the long-term prospects of Bitcoin?

In a recent report to investors, ARK Invest, which manages $6 billion in assets, remains optimistic about the long-term prospects of BTC. In the report, ARK Invest said that Bitcoin is at an oversold level. Specifically: In February, the price of Bitcoin fell 17.6%, closing at $86,391 at the end of the month. As of March 3, the price of Bitcoin was between the short-term holder (STH) cost basis ($92,020) and the 200-day moving average ($82,005).

The Fear & Greed Index has reached a level of "extreme fear" not seen since mid-2022. But ARK Invest believes that the market is overreacting to the current macroeconomic and geopolitical sentiment and is too pessimistic.

Bitcoin’s Spent Cost Profit Ratio (SOPR) has fully retraced to 1. In a bull market, a SOPR of 1 means the market as a whole is at breakeven levels, which usually coincides with local bottoms. SOPR tracks realized profits or losses and compares them to the relevant transaction price.

In addition, Bitcoin’s rolling four-year compound annual growth rate (CAGR) has fallen to its lowest level ever, at just 14%. While this has important implications for Bitcoin as a long-term holding asset, a lower CAGR could also be a sign that Bitcoin is oversold.

Turning to the macro environment, ARK Invest said that economic indicators, including slowing money turnover growth and falling consumer confidence, suggest that businesses and households have become more cautious during the political transition. According to the University of Michigan Consumer Sentiment Survey, consumer confidence has fallen below pre-election levels. Households appear to have become more cautious, delaying purchases until the impact of new policies becomes clear. Evidence of this caution includes a decline in real consumer spending in January and weaker-than-expected earnings guidance from companies such as Walmart and Target.

Nearly a third of the workforce, including quasi-government positions at the federal, state, local, and education and healthcare levels in the United States, may be concerned about government spending cuts. Despite the challenges in the short term, potential deregulation, tax cuts, and innovation incentives in areas such as artificial intelligence (AI) and robotics could drive growth and productivity over time. Researchers have previously predicted that the combination of artificial intelligence and cryptography will add $20 trillion to the global economy by 2030. Previously, ARK Invest stated in its "Big Ideas for 2025" report that the price of Bitcoin could be between $300,000 and $1.5 million by 2030, with a neutral forecast of $710,000.

On her podcast, In the Know, Cathie Wood painted a bullish vision in which technological innovation will drive real GDP growth to more than double the historical rate, even as short-term economic indicators show signs of weakness. “We are getting close to the end of a ‘rolling recession,’ ” she said, referring to the recession she believes has been unfolding since the Federal Reserve began raising interest rates in 2022. “The bad news is we have to go through this process.” A “rolling recession” refers to an economic phenomenon in which different industries and sectors take turns experiencing recessions while the overall economy and job market remain relatively stable.

She later tweeted that the current crisis (the "process" she referred to in her video) could be the door to a "deflationary boom" by the second half of 2025. Despite the current economic weakness, Cathie Wood seemed to share Trump's optimistic view of the future of the US economy, especially with the rise of new technologies that are reshaping the economy. "We may be on the threshold of the most important productivity growth in history," she said.

Cathie Wood discussed the fiscal policy proposals under the Trump administration, including the $4.5 trillion tax cut plan that has already passed the House Budget Committee. She argued that Trump's fiscal policies, combined with his deregulatory efforts, could spark a major economic boom.

She mentioned the changes that have taken place in the cryptocurrency and digital asset space following the departure of SEC Chairman Gary Gensler, noting that the industry is celebrating a “digital asset revolution” at the White House.

For investors, Cathie Wood predicts that the market will shift from the "Big Seven" to a wider range of innovative stocks. She pointed out that although the stock prices of the "Big Seven" companies have tripled in the past five years, the truly disruptive innovative stocks have only increased by about 30%.

At present, ARK Invest's optimism about Bitcoin and the US economic outlook is not without basis, and it has also injected a shot of adrenaline into investors in the recent generally negative market environment. However, the complexity of the market and the uncertainty in reality cannot be ignored. It is worth thinking about how to find the growth momentum of the encryption and technology industries in the variables.