Amid a sharp cryptocurrency market decline, Cathie Wood’s Ark Invest executed a significant portfolio rebalancing Tuesday, purchasing $8.7 million in Coinbase shares while simultaneously offloading $8.6 million from its own spot Bitcoin ETF. The move marks Ark’s first Coinbase acquisition since October, coming at a time when both assets have suffered substantial losses from their recent peaks.
The investment firm added 41,032 Coinbase shares to its Next Generation Internet exchange-traded fund (ARKW), coinciding with a broader crypto sell-off that has seen Bitcoin drop 10% over two days and altcoins plummet even further. This strategic reallocation highlights Ark’s commitment to maintaining diversified portfolios despite ongoing market volatility.
First Coinbase Purchase Since October’s Pre-Election Positioning
Tuesday’s $8.7 million Coinbase acquisition represents Ark’s first purchase of the cryptocurrency exchange’s stock since buying $2.2 million worth in early October, just weeks before Donald Trump’s presidential election victory. That pre-election position proved initially profitable as Coinbase shares subsequently doubled to an all-time high of $343.62 in December, while Bitcoin surged 76% to over $109,000 by Inauguration Day.
Recent market conditions tell a different story. Coinbase stock has plummeted approximately 38% from its peak, closing Tuesday at $212.49, down 6.4% for the day and over 17% year-to-date. The company currently holds a market valuation of $39.5 billion. Following the acquisition, Coinbase now stands as the sixth-largest holding in Ark’s ARKW fund with a 5.5% weighting worth approximately $94.4 million.
Simultaneous ETF Sale Reflects Portfolio Balancing Strategy
In a parallel move, Ark sold 98,060 shares of its own spot Bitcoin ETF (ARKB) from the same ARKW fund—a divestment worth $8.6 million. This marks Ark’s largest ARKB sale since September, when it offloaded 44,609 shares valued at $2.8 million.
The firm’s investment approach prevents any single holding from exceeding 10% of a fund’s portfolio, necessitating regular rebalancing as asset values fluctuate. Despite the sale, ARKB remains ARKW’s top allocation with a 10.7% weighting valued at approximately $182.2 million, followed by Tesla, Roku, Roblox, and Robinhood.
Since its January 2024 launch, Ark’s spot Bitcoin ETF has generated $2.7 billion in net inflows and currently manages $4.7 billion in assets. However, U.S. spot Bitcoin ETFs broadly experienced significant outflows this week, with $539 million exiting on Monday followed by record outflows of approximately $1 billion on Tuesday.
Market Context: Widespread Crypto Decline
Ark’s strategic shifts come during a substantial cryptocurrency market correction. Bitcoin’s 10% two-day decline was eclipsed by steeper drops in alternative cryptocurrencies—Ethereum fell 18%, XRP 19%, and Solana 22% before finding support. The GMCI 30 index, representing 30 major cryptocurrencies, declined 15% over two days before showing modest recovery.
Multiple factors contributed to the market turbulence, including uncertainty surrounding President Trump’s tariff plans, fallout from cryptocurrency exchange Bybit’s record $1.5 billion hack, and the unwinding of the recent memecoin speculation frenzy.
“While recent weakness raises concerns about whether bitcoin has peaked, onchain and macro signals suggest we are still in the early-to-mid bull cycle,” 21Shares Crypto Research Strategist Matt Mena told The Block. “Despite the recent drawdown, crypto remains up over 50% from a year ago, showing the market’s long-term resilience.”
