In an interview with Bloomberg, ARK Invest CEO and CIO Cathie Wood recently discussed why her flagship fund, Ark Innovation (ARKK), is adding to its position in shares of Coinbase (COIN) after the SEC sued Binance, one of Coinbase’s biggest competitors.
ARKK purchased nearly 330,00 shares of COIN on June 6, 2023, worth about $17 million at the time, according to disclosure statements. Two other funds, Ark Fintech Innovation ETF and Ark Next Generation Internet ETF, also bought 35,700 shares, worth $1.8 million, and 53,900 shares, worth $2.8 million, respectively.
Across all three funds, ARK’s average entry price is $272.75 – $282.93, with their total position being currently valued at $1.77 billion. At the time of writing, COIN is trading at $53.90. Needless to say, the fund is deeply in the red on this trade so far.
As far as why she’s still bullish, her reasoning boils down to this: SEC enforcement will lead Coinbase to become the only game in town when it comes to cryptocurrency exchanges in the USA. Of course, this assumes that Coinbase will triumph in its own legal battles with the SEC.
Wood explained that she sees a difference in the accusations being brought against the two exchanges. While both are facing lawsuits by the SEC over the alleged trading and staking of unregistered securities, Binance may also be facing more serious charges.
Binance CEO Changpeng Zhao, or CZ for short, was faced with a civil enforcement action filed by the US regulator for derivatives in March. The action alleged that CZ and three of the exchanges affiliates violated the Commodity Exchange Act (CEA) and several CFTC regulations.
These types of allegations “have nothing to do with Coinbase,” according to Wood. Therefore, she believes that Coinbase will survive the storm and emerge victorious, with its biggest competitor out of the picture.
It’s hard to say whether or not Wood’s conviction on COIN can be considered well-justified. While some analysts share her view, others do not. The analyst consensus on the stock is a Hold rating with an average price target of $58.49, or roughly 12% to the upside from current levels.
Several notable analysts have come forward with more bullish price targets of $70, including John Todaro and Atlantic Equities.
The RSI is perfectly neutral at a reading of 49.7, suggesting no decisive direction for COIN at this time.
It could be possible that COIN is the best and, soon-to-be only,…
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