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ARK Invest Sells Off Coinbase Stock: Key Diversification Strategy at Play

ARK Invest Sells Off Coinbase Stock: Key Diversification Strategy at Play

TL;DR

  • ARK Invest, led by Cathie Wood, sold nearly $150 million in Coinbase shares last week.
  • Coinbase shares have risen more than 80% in value in the last month due to a rally in the price of Bitcoin.
  • ARK Invest sells Coinbase shares to prevent the company’s weight in its ETFs from exceeding 10%.

Last week, investment firm ARK Invest, led by Cathie Wood, made a significant move by dumping a large amount of shares in Coinbase, the popular cryptocurrency exchange platform.

More than 580,000 Coinbase shares, valued at approximately $149.85 million at Friday’s closing price, were sold by ARK Invest, marking the company’s largest sale of Coinbase shares since mid-February.

These sales were made in three of ARK’s exchange-traded funds (ETFs): the Innovation ETF (ARKK), the Next Generation Internet ETF (ARKW), and the Fintech Innovation ETF (ARKF).

A key strategy of ARK Invest is to ensure that no individual holding exceeds 10% of an ETF’s total weight.

Therefore, when an asset, such as Coinbase, experiences a significant increase in value, considerable sales are necessary to rebalance the portfolio.

The notable increase in the value of ARK Invest shares with the Coinbase company

This increase is largely due to an impressive 80% increase in the last month.

ARK Invest Sells Off Coinbase Stock: Key Diversification Strategy at Play

The rise has been primarily driven by a 50% rally in the price of Bitcoin over the same period.

Despite the recent selling, Coinbase’s weight in the three ARK ETFs is still over 10%, indicating that more selling by ARK could be anticipated, especially after Bitcoin hit a new all-time high above the $70,000.

ARK Invest’s decision to sell Coinbase shares reflects its focus on active portfolio management and its commitment to maintaining diversification and balance in its funds.

This move also suggests that the company could be looking for opportunities to capitalize on gains after the significant rises in Coinbase’s share price.

In pre-market on the day of the news, Coinbase shares showed an increase of 5.6%, reaching $27.

This market movement reflects the continued volatility and interest in cryptocurrencies and associated companies in the financial market.

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