What signals are released by ARK Invest increasing its stake in Coinbase and reducing its holdings in Block, and why is it clearly bullish on Bitcoin?

Author: Weilin, PANews

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

It is also noteworthy that ARK Invest has significantly reduced its holdings in the payment company Block, with three reductions on March 11, March 12, and March 17 totaling approximately $30.35 million.

Meanwhile, in this month's market, a memorable event occurred on March 11 when Bitcoin's price experienced a sharp decline, but ARK Invest founder Cathie Wood's bullish comments at that time attracted widespread attention in the market. This company, which manages $6 billion in assets, stated in a report to investors that ARK Invest remains optimistic about the long-term prospects of BTC. Why does ARK Invest firmly believe in Bitcoin?

Buying the Dip: $16.7 Million in Coinbase Stock During a Market Decline, Significant Reduction in Block

On March 10, as Coinbase's stock price fell by 17.6%, Ark Invest purchased 64,358 shares of Coinbase stock, valued at $11.5 million. Of this, the Ark Innovation ETF (ARKK) bought 52,753 shares of Coinbase stock (worth $9.4 million), and the Ark Fintech Innovation ETF (ARKF) bought 11,605 shares of Coinbase stock (worth $2.1 million). Additionally, according to trading documents, ARK Invest increased its holdings by 29,353 shares of Coinbase stock through its ARK Innovation ETF (ARKK) on March 13, valued at approximately $5.2 million, while Coinbase's stock price fell by 7.43% that day, closing at $177.49. These three recent increases in Coinbase holdings total $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%, valued at approximately $383 million, second only to Tesla and Roku (an American streaming and network television company). ARK Invest previously stated that its goal is to ensure that no single stock holding exceeds 10% of the fund's portfolio.

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

In terms of reductions, on March 17, ARKW sold 12,881 shares of Block stock. 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 significant progress in its open-source generative AI research, and predicted that its performance would improve significantly. CEO Jack Dorsey expects the system's computing power to increase by 30 times compared to current levels. However, Raymond James analyst John Davis believes that the company's fourth-quarter financial report was poor, indicating that Block stock "is not suitable for faint-hearted investors." The stock sold by ARK Invest on March 17 was priced 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 stock.

Bitcoin Stands Out in a Market Decline; Why Does ARK Invest Remain Optimistic About Bitcoin's Long-Term Prospects?

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

The Fear & Greed Index has reached an "extreme fear" level not seen since mid-2022. However, ARK Invest believes that the market is overreacting to the current macroeconomic and geopolitical sentiments, being overly pessimistic.

The Spent Output Profit Ratio (SOPR) of Bitcoin has fully retraced to 1. In a bull market, a SOPR of 1 indicates that the market is at a breakeven level, usually coinciding with local bottoms. SOPR tracks realized profits or losses and compares them to the relevant trading prices.

Additionally, Bitcoin's rolling four-year compound annual growth rate (CAGR) has dropped to a historical low of only 14%. While this has significant implications for Bitcoin as a long-term holding asset, the lower CAGR may also signal that Bitcoin is oversold.

Regarding the macro environment, ARK Invest stated that economic indicators (including a slowdown in money turnover growth and a decline in consumer confidence) indicate that businesses and households are becoming more cautious during this political transition. According to the University of Michigan Consumer Confidence Survey, consumer confidence has fallen below pre-election levels. Households seem to be becoming more cautious, delaying purchases until the impacts of new policies become clear. Evidence of this cautious attitude includes a decline in real consumer spending in January and lower-than-expected earnings guidance from companies like Walmart and Target.

Nearly one-third of the workforce, including quasi-government positions in federal, state, local, and education and healthcare sectors, may be concerned about government spending cuts. Despite facing challenges in the short term, potential deregulation, tax cuts, and innovation incentives in areas such as artificial intelligence (AI) and robotics may drive growth and enhance productivity over time. Researchers have previously predicted that the combination of AI and cryptocurrency technology could add $20 trillion to the global economy by 2030. Furthermore, ARK Invest had previously stated in its "Big Ideas 2025" report that Bitcoin's price could range from $300,000 to $1.5 million by 2030, with a neutral expectation of $710,000.

In Cathie Wood's podcast "In the Know," she painted a bullish vision that technological innovation will drive real GDP growth to exceed historical growth rates by more than double, even as short-term economic indicators show signs of weakness. She stated, "We are nearing the end of a 'rolling recession,'" mentioning that she believes the economic recession has been unfolding since the Federal Reserve began raising interest rates in 2022. "The bad news is that we have to go through this process." A "rolling recession" refers to an economic phenomenon where different industries and sectors experience recessions in turn, while the overall economy and job market remain relatively stable.

She later stated on Twitter that the current crisis (the "process" she mentioned in her video) could open the door to a "deflationary boom" in the second half of 2025. Despite the current economic weakness, Cathie Wood seems to align with Trump's optimistic view of the future of the U.S. economy, especially with the rise of new technologies reshaping the economy. "We may be on the threshold of the most significant 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 believes that Trump's fiscal policies, combined with deregulation efforts, could trigger a significant economic boom.

She pointed out the changes that have occurred in the cryptocurrency and digital asset space since SEC Chairman Gary Gensler's departure, 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 "seven tech giants" to a broader range of innovative stocks. She noted that while the "seven tech" companies have seen their stock prices triple over the past five years, truly disruptive innovative stocks have only increased by about 30%.

Currently, ARK Invest's optimistic attitude toward Bitcoin and the U.S. economic outlook is not unfounded, as it has injected a dose of confidence into investors in the recent generally negative market environment. However, the complexity of the market and the uncertainties in reality cannot be ignored. How to find growth momentum in the cryptocurrency and technology sectors amidst these variables is worth pondering.