Ark Invest sells $3.9m worth of Coinbase shares amid price drop following Powell’s hawkish speech
2024-12-19
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Ark Invest offloaded 13,780 Coinbase shares — worth $3.9 million — from its Fintech Innovation exchange-traded fund (ARKF) on Wednesday amid a 10% drop in COIN’s price following The Federal Reserve’s more hawkish stance.
It’s one of the most significant sales of the stock for the Cathie Wood-led investment firm since it offloaded $2.8 million worth of COIN on Sept. 23. Ark’s investment strategy generally aims to avoid individual holdings taking up more than 10% of an ETF’s portfolio. This is to maintain diversification within its funds — meaning it is likely to continue rebalancing its weightings if COIN’s value rises or falls relative to Ark's other holdings in the fund.
According to the firm’s latest disclosures, COIN is the second-largest holding within its ARKF ETF with a weighting of 9.9% as of Dec. 18, slightly behind the fund’s Spotify allocation. ARKF’s Coinbase holdings have a current market value of around $110 million. Overall, ARKF is up around 54% this year.
Coinbase’s stock traded for $279.86 at market close on Wednesday, down 10.2% for the day. However, it is currently up 3.5% in pre-market trading and has gained over 61% year-to-date, according to TradingView.
COIN/USD price chart. Image: TradingView.
Coinbase is currently valued at $52.1 billion, according to The Block’s data dashboard.
Market reacts to Powell’s more hawkish stance
“The Federal Reserve announced a 25 bps rate cut yesterday, as widely anticipated,” BRN analyst Valentin Fournier said in an email to The Block. “However, Chair Jerome Powell’s subsequent speech introduced a hawkish tone, cutting the outlook for 2025 rate reductions from four to just two. This unexpected shift rattled markets, despite persistent signs of sticky inflation in recent months.”
Bitcoin and the broader crypto market also reacted to Powell’s hawkish speech, having initially ticked higher following the Fed’s interest rate cut. Bitcoin fell around 9% from above $108,000 before Powell's remarks to below $100,000 at one point before recovering. The foremost cryptocurrency is currently trading for $102,419, according to The Block’s Bitcoin Price Page.
BTC/USD price chart. Image: The Block/TradingView.
The market also seemingly reacted to Powell’s reiteration that the Fed can’t own bitcoin without Congressional approval, seeing his statement as a barrier to President-elect Donald Trump's strategic bitcoin reserve pledge. However, Trump's plan, and Sen. Cynthia Lummis of Wyoming’s related draft bill, involves directing the U.S. Treasury to buy one million bitcoins over a period of five years, not the Fed.
Despite the bearish sentiment, U.S. spot Bitcoin ETF inflows remain strong, adding another $275.3 million on Wednesday, extending their positive streak to 15 days, totaling more than $6.7 billion. U.S. spot Ethereum ETFs also generated net inflows on Wednesday, adding $2.5 million, stretching their own positive run to 18 days, totaling nearly $2.5 billion, according to data compiled by The Block.
Meanwhile, the GMCI 30 index, which represents a selection of the top 30 cryptocurrencies, dropped over 15% following the FOMC press conference, falling to 188.07 before recovering to 200.30 at the time of writing.
“Looking ahead, heightened volatility is expected as markets price in elevated expectations for Donald Trump’s upcoming presidency,” Fournier said. “Despite short-term turbulence, the long-term outlook remains bullish.”
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