Coinbase is Cathie Wood's star investment

Coinbase is Cathie Wood's star investment

Coinbase has become the star investment of Ark Invest founder Cathie Wood, adding $911 million to her portfolio. Equal to 6.8%.

Ark Invest founder Cathie Wood has made Coinbase Glubb RG-A her flagship investment after reaching a portfolio value of $911 million. That equates to 6.8%, according to Anders Bylund at Yahoo Finance.

Despite Coinbase’s recent selloff amid its recent price surge, the stock remains Ark’s top holding by a wide margin. This is a testament to Wood’s long-term vision for the cryptocurrency sector. Despite turning a profit, Wood sees opportunities for sustainable growth in the cryptocurrency space, with Coinbase and the new Ark21Shares Bitcoin ETF leading the way.

Most everyday investors don’t manage billions of dollars of funds, and what works for Cathie Wood may not be best for you. Still, Wood’s enthusiastic seal of approval may indicate a stock worthy of a closer look. So let’s take a look at the reasons behind Ark’s significant investment in Coinbase, examining the potential risks and rewards to help you decide if it’s right for your portfolio.

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Wood’s Opinion: Coinbase Has a Strategic Advantage

Cathie Wood has made it clear that she expects big things from the cryptocurrency market, and especially from the industry’s leading name, Bitcoin. Its 2030 price target for the “digital gold” currency has been $1.48 million per token over the past year, with several iterations of the same long-term outlook. The global economy is going digital. Bitcoin’s nearly inflation-free design and strictly limited supply will cause coin prices to rise dramatically over time, assuming it continues to be the leading crypto solution as the market evolves.

As such, he sees Coinbase as an important part in the asset management infrastructure around Bitcoin and other cryptocurrencies. The company differentiates itself from other large service providers like Binance due to its pan-US experience and proven focus on regulatory compliance. Unlike Binance, which has faced allegations of criminal activity and data security concerns, Coinbase has maintained a clean regulatory profile.

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In his opinion, this approach puts Coinbase in a favorable position compared to its competitors, making it a safe choice for investors who want to take advantage of the growth in the cryptocurrency market. At its core, Wood sees Coinbase as a key enabler in the broader mainstream adoption of cryptocurrencies, particularly Bitcoin. Therefore, their funds are buying Coinbase shares when their share prices are falling due to scams or fraud elsewhere in the crypto market.

Understanding Ark’s Evolving Crypto Portfolio

That said, Cathie Wood is not strictly committed to the Coinbase opportunity. His fund has almost halved its Coinbase holdings since June 2023, leaving cash gains to reinvest in other ideas. Diversification works for big-name investors too.

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And some of Coinbase’s former funds have moved to make more direct bets on Bitcoin. Early variations of this idea included the Grayscale Bitcoin Trust when it was a traditional fund and not a more flexible exchange-traded fund (ETF). Today, Ark Invest manages its own Bitcoin-based ETF, and some of its other funds already own shares of the Ark 21Shares Bitcoin ETF.

So Wood is not putting all of his crypto apples in the same digital cart, but rather spreading his cryptocurrency exposure across a few different asset classes. Nevertheless, Coinbase remains the largest holding of Ark, not only in the cryptocurrency sector but in the entire stock portfolio.

Coinbase Glb Rg-A is trading higher at $132.15 on Wednesday afternoon. The 70 period moving average is below the last eight candles, the RSI is down 44 points and the MACD lines are below the zero level.