Powell Turns Hawkish, Cathie Wood Sells Coinbase Shares

Following a market slump triggered by Federal Reserve Chair Jerome Powell’s hawkish remarks, Ark Invest has sold shares of Coinbase.

On December 18, Ark Invest, headed by Cathie Wood, sold 13,780 shares of Coinbase, generating $3.9 million in proceeds.

This decision followed remarks from Federal Reserve Chair Jerome Powell, who announced a 25-basis-point reduction in the federal funds rate—marking a two-year low after consecutive cuts in prior meetings.

When addressing potential further rate reductions, Powell stated, “We have to stay on task, though, and continue to have restrictive policy so that we can get inflation down to 2 percent.” He also emphasized that the Federal Reserve remains focused on its dual mandate: achieving maximum employment and price stability for the benefit of the American people.

The sale of shares in the leading cryptocurrency exchange was triggered by a significant drop in COIN’s value, which declined by over 10% by the close of trading on December 18, settling at $279.86. This transaction was one of the largest for Ark Invest since September 23, when the firm sold $2.8 million worth of COIN shares.

Cathie Wood, founder and CEO of Ark Invest, is well-known for her optimistic view of innovative technologies, including blockchain and cryptocurrencies. Her investment strategy focuses on companies she believes have exponential growth potential.

Ark Invest is heavily involved in sectors such as artificial intelligence, robotics, genomics, and cryptocurrencies. Wood has consistently voiced confidence in the long-term outlook for Bitcoin and other digital assets. However, despite her strong commitment to the crypto market, Wood remains committed to principles of portfolio diversification and meticulous risk management.

Related: Cathie Wood: The ARK Invest Founder and Technology Advocate

According to the company’s internal guidelines, no single asset can account for more than 10% of the total fund’s volume. This approach is aimed at minimizing risks and ensuring portfolio stability. In the context of cryptocurrencies, this strategy means that despite Cathie Wood’s strong belief in the market’s potential, Ark Invest avoids over-concentrating investments in any single cryptocurrency or crypto-related company.

The decision to sell Coinbase shares was most likely driven by the need to rebalance the ARKF ETF portfolio following the drop in COIN’s price.

Since the sale was prompted by market conditions, it should not be seen as a negative signal regarding Coinbase or the broader cryptocurrency market. For now, there is no reason to worry about the future of shares in the world’s leading crypto exchange.

Ark Invest Rebalances Portfolio. Source: finance.yahoo

Ark Invest is likely to continue this approach, adjusting its position in Coinbase based on its value fluctuations relative to other assets in the fund.

As of December 18, Coinbase shares represented the second-largest holding in the ARKF ETF portfolio, accounting for 9.9%, just behind Spotify at 10.1%. The total market value of Coinbase assets in ARKF is estimated at approximately $110 million. Despite the recent drop, ARKF has posted impressive growth of around 54% this year, reflecting the overall success of Cathie Wood’s investment strategy.

Coinbase shares are already recovering in pre-market trading. Source: finance.yahoo