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ARK Invest CEO says Bitcoin Is a "Much Bigger Idea than Apple or Amazon" as Crypto Gains More Recognition

Cathie Wood, the CEO of Ark Invest who made a bullish prediction on Tesla when Wall Street was skeptic, has made yet another one – and it’s on Bitcoin.

Wood considers Bitcoin to be a game-changer and uncovers why the cryptocurrency is soaring and gaining traction as a hedge. In an interview with Yahoo Finance, she disclosed that her asset management firm had foreseen that Bitcoin and other cryptocurrencies would eventually gain institutional support. What they were not expecting, however, was the portion each firm allocated to BTC. Wood explained why Bitcoin was so attractive to financial institutions. She said:

“We have been expecting institutions to start moving into Bitcoin and other crypto assets, but primarily Bitcoin, the most secure of the blockchains, because if you look at the correlation of Bitcoin’s performance relative to any other asset class, it has the lowest correlation – meaning if you buy some Bitcoin, you will further diversify your portfolio and increase your returns with lower risk.”

She further revealed:

“Institutions look for that low correlation. Bitcoin has it. That’s clear. We have 10 years of history now.”

Why Bitcoin will steal the tech spotlight

The Ark Invest CEO hinted that in the future, Bitcoin’s potential may be even bigger than that of Amazon or Apple. Currently, Bitcoin’s market cap does not even equate to half of Apple or Amazon’s monetary value, but its unique features have been recognized by many. Wood said:

“Bitcoin is roughly a $600 billion dollar market cap, so not even half the size of Apple or Amazon, put it in perspective and yet it has a really big idea. I think a much bigger idea than Apple or Amazon.”

She added that it was really the first of its kind, as Bitcoin was global and truly decentralized as a digital currency. The CEO added that countries have increasingly recognized Bitcoin’s budding potential, and said:

“When China basically shut down the exchanges in China that dealt with crypto, especially Bitcoin, that activity just moved over to Japan, Thailand and Korea – other countries that wanted to move ahead in this innovation space. They did not want to miss this next big thing.”

Bitcoin has increasingly gained traction, especially since the last quarter of 2020, where its bull run gained momentum and propelled the cryptocurrency to new all-time highs.

Crypto innovation on the rise

From the beginning of 2020 to now, when Bitcoin’s value was around $7,200, the cryptocurrency has soared to new heights, increasing five-fold in value to trade around $38,000 as institutional corporations led by MicroStrategy, Square, and MassMutual have come to recognize Bitcoin’s budding potential. Due to the pandemic, the cryptocurrency industry has attracted more attention, as many have come to recognize crypto as a hedge against monetary policies and inflation rates.

Many industry experts have acknowledged that the underlying narrative surrounding Bitcoin has quickly shifted in 2020. While holding Bitcoin was previously considered a risky move to take as a portfolio manager, the narrative quickly shifted to it being a career risk to not own Bitcoin.

Bitcoin is not the only cryptocurrency that has been gaining more and more traction. Historically, altcoins also surge higher when Bitcoin undergoes bullish momentum.

Currently, the second-largest cryptocurrency by market cap behind Bitcoin, Ethereum, has hit a new all-time high above $1,600. Currently, the cryptocurrency is in price discovery mode, up nearly 7% from yesterday’s price.

Despite Ethereum’s high, Grayscale has taken the opportunity to add more Ether coins to its Grayscale Ethereum Trust, and the move can be perceived as a huge vote of confidence for Ethereum.

Coinbase Stock Volatility Similar to Bitcoin, Ark Invest Purchases $246M Worth of $COIN

The inherent volatility of Bitcoin (BTC), the world’s largest digital currency seems to have translated to Coinbase shares as the crypto firm made its public debut on the Nasdaq Exchange.

Wednesday, April 14th marked a historic date for the trading platform as it became a publicly-listed firm through direct listing.

Coinbase, which trades under the ticker symbol “COIN,” opened trading at a price of $381 per share on Nasdaq, a figure well above the $343.58 the shares were trading at on the private secondary market. As investor excitement peaked, the share price touched a high of $429.54 in the intraday trading before finally cresting at a close of $328.28, up 31.31% from the opening price.

Bitcoin’s Volatility

Bitcoin is a highly volatile asset class and as Coinbase’s entire business operation is based on the BTC and other equally volatile digital assets, the company’s shares are susceptible to similar spikes.

Coinbase is now trading in a regulated market environment, however, investors who buy Coinbase shares may have to adjust to the realities of the broader influence of the digital currency ecosystem that powers the company’s activities. An uptick in crypto market sentiment can translate to a great day for Coinbase’s shares while a downtrend experienced by the crypto market may have a negative effect.

Coinbase itself has acknowledged this noting that market trend can affect the number of active users of its platform, and by extension, its revenue generation. However, many industry experts see Coinbase’s entry into the public market as a win for crypto as it attracts more mainstream entry into the crypto space.

Ark Invest Backs Coinbase

Ark Invest, one of Wall Street’s more renowned investment managers has backed Coinbase by acquiring a total of 749,205 shares of Coinbase, valued at $246 million going by the share closing price of $328.28.

Ark Invest is a Bitcoin proponent, and the purchase of Coinbase’s shares is a testament to its belief in the future of the burgeoning cryptocurrency ecosystem and its growing assets.

Cathie Wood’s ARK Invest Purchased Coinbase Stock on Its First Day of Trading

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Ark Investment Management LLC purchased $246 million worth of Coinbase shares on the crypto exchange’s Nasdaq debut on Wednesday, April 14 and sold some of its Tesla (TSLA) stock.

ARK Invest asset management company bought 749,205 Coinbase shares (ticker: COIN) for three of its actively managed exchange-traded funds: ARK Fintech Innovation EFT (ARKF), ARK Next Generation Internet EFT (ARKW), and The ARK Innovation ETF (ARKK).

The firm bought $168 million worth of Coinbase shares for its ARK Innovation fund, while the remaining investments went into its fintech innovation and next-generation funds.

On Wednesday, Coinbase shares listed at $381 and hit a high of almost $430 before closing down at around $328 during that day. On Thursday’s close, Coinbase shares were trading slightly down in pre-market hours at about $319 per share.

Based on Thursday’s close, Coinbase’s valuation stands at around $84 billion, for its fully diluted capitalization of 261.3 million shares.

The move to purchase Coinbase shares gives ARK more indirect exposure to cryptocurrencies on top of its big bet on the likes of Tesla, which recently invested in Bitcoin and stated that it would accept it as a payment for its cars.

Although ARK sold Tesla shares worth about $178 million, the stock is still by far the biggest position by value on its major funds.

Crypto as New Alternative Investment

Cathie Wood, the founder and CEO of ARK Investment Management LLC, is a big champion of Bitcoin and recently said that the growth of crypto assets will “gut” traditional banks. Wood views cryptocurrencies as a substitute for cash and as part of the solution to the dying the 60/40 stock/bond allocation in balanced portfolios.

Wood recently said that Bitcoin and other crypto assets could eventually become part of the recommended portfolio for every investor, which is 60% in stocks and 40% in fixed income.

According to Wood, Bitcoin has multiple uses. Besides serving as a substitute for bonds and cash, Bitcoin is also a substitute for gold, which has failed to rise just like the dollar has declined. She believes that institutions can use Bitcoin instead of cash as a hedge against unhinged monetary policy.

Earlier this year, Tesla converted part of its balance sheet cash into Bitcoin. Other firms have also increasingly embraced cryptocurrency, either by buying the assets or supporting crypto payments.

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Elon Musk’s Concerns Over Bitcoin's Energy Consumption Are Misguided, Says Ark Invest

Yassine Elmandjra, an analyst at Ark Investment Management company, said that Elon Musk’s concerns about Bitcoin’s energy usage were “misguided.”

Last week, Elon Musk, the founder and CEO of Tesla Inc., caused an uproar in the crypto space over his concern that Bitcoin mainly relies on fossil fuels for its energy needs. He further said that Tesla will no longer accept Bitcoin as a payment method. His comments cast doubt about his bullishness on crypto.

However, in his analysis note, Elmandjra stated that he believes Bitcoin will actually lead a greater share of the grid powered by renewables and therefore will become a “net positive for the environment,” and accelerate a green-energy revolution.

Bitcoin mining “could impact the amount of renewable energy provisioned to the grid by transforming intermittent power resources into baseload generation by way of energy storage… renewables would be able to satisfy only 40% of the grid’s needs in the absence of Bitcoin mining but 99% with the commercial ‘subsidies’ associated with Bitcoin mining,” Elmandjra wrote.

Elmandjra revealed that Musk’s decision to stop accepting Bitcoin as a method of payment seems to have been triggered by Greenidge’s plans to revive a coal power plant to mine Bitcoin. Musk referenced Greenidge’s announcement in a tweet.

Elmandjra further disclosed that as a result, Greenidge made a clarification that not only is its plant powered by natural gas and feeds the grid, but it also purchases carbon credits to offset the emissions.

Elmandjra’s analysis supports a whitepaper published by Square and ARK Invest last month that suggested that renewable energy adoption would rise due to Bitcoin mining.

Musk gave Elmandjra’s analysis a nod of approval by replying “True.”

Carbon Offsetting Taking Shape

On May 11, Elon Musk announced that Tesla halted purchases of its motor vehicles with Bitcoin because of concerns over “rapidly increasing use of fossil fuels for Bitcoin mining.”

Since then, Bitcoin price has dropped to a new low of $42,000, but the crypto bounced briefly after Musk clarified that Tesla had not sold its $1.5 billion worth of Bitcoins it purchased in January.

A few days ago, Greenidge Generation Bitcoin mining company announced that beginning June 1, the company would be “carbon neutral” for the rest of 2021 and beyond. The company’s announcement followed the recent statements from Tesla after the motor vehicle firm cited environmental concerns over Bitcoin mining.

Greenidge New-York based Bitcoin mining firm has joined what seems to be an increasing number of other cryptocurrency firms seeking to minimize their carbon footprint through carbon offsetting – funding ways to reabsorb excess CO2 from the atmosphere or reducing emissions.

In December 2020, Square Inc., announced plans to launch a clean energy investment initiative to help make the Bitcoin supply chain greener. The San Francisco-based company announced the launch of its Bitcoin clean energy investment initiative, where it committed $10 million to support firms that help drive efficiency and adoption of renewables within the Bitcoin ecosystem.

Cathie Wood’s Ark Invest Purchases Twitter Shares Worth $55.34 Million

Cathie Wood’s investment firm Ark Invest bought 829,907 shares worth $55.34 million of Twitter shares on the day in which the popular social media giant led by Jack Dorsey started allowing users to send and receive tips using Bitcoin as part of a broader push to help users make money from the service.

What is interesting in the announcement of Wood’s purchase is the timing. On Thursday, September 23, Ark Invest used two of its ETFs (the ARK Innovation ETF and the ARK Next Generation Internet ETF) to purchase Twitter stocks – the same day after Twitter, the popular social media firm, launched a feature that enables users to send and receive tips in Bitcoin.

The Investment firm’s flagship fund ARK Innovation ETF bought 661,141 shares in the company, while the ARK Next Generation Internet ETF purchased another 168,766 shares.

Following the announcement of the Bitcoin tipping feature, Twitter shares climbed 3.80% higher on Thursday to close at $66.69.

Ark Invest already owned shares in Twitter. Just a month before booking some profits in August, the popular investment company had bought one million shares in Twitter after Jack Dorsey told investors that the flagship cryptocurrency Bitcoin would be part of the social media company’s future.

As a result, Twitter has become ARK’s third-largest investment out of about 50 stocks.

Cathie Wood’s Investment Strategy

Cathie Wood, the CEO of ARK Invest, appears to have taken the investing world by storm.

Last year, Wood’s flagship fund ARK Innovation ETF outperformed the greater market by 9x – 149% versus 16%, which earned her recognition as the best stock picker of that year.

With Wood’s investing strategy focused on disruption in tech, it makes sense that ARK’s exchange-traded funds embrace cryptocurrencies.

Cathie Wood’s Twitter bet reflects her thinking that ongoing regulatory issues for cryptocurrencies will be manageable. Agencies across the globe have intensified their scrutiny of exchanges and cryptocurrencies as they have become more popular.

On September 14, Wood made a bullish prediction for Bitcoin, stating that it could soar to as much as $500,000 in five years, one of the most ambitious predictions on Wall Street.

Besides that, ARK Investment management firm recently gave itself clearance to purchase Canadian Bitcoin exchange-traded funds.

On September 13, the asset management company revised the prospectus for its ARK Next Generation Internet ETF to open the possibility of investing in Bitcoin exchange-traded funds (ETFs) in Canada.

According to an amended SEC filing for the ARK Next Generation Internet ETF, the fund may invest in the Grayscale Bitcoin Trust (GBTC) or other pooled investment vehicles in Bitcoin, like exchange-traded funds that are domiciled and listed for trading in Canada (Canadian Bitcoin ETFs).

The ARK Next Generation Internet ETF already invests in Bitcoin indirectly through the Grayscale Bitcoin Trust. GBTC is the second-largest holding in the ETF, with a 5.52% weight worth more than $313 million.

Wood also owns shares (stocks) in three prominent pubic firms (Robinhood, Coinbase, and Square Inc), is active in cryptocurrency adoption and stand to benefit.

Image source: Bloomberg

Cathie Wood’s Ark Invest Purchases $79.4M of Robinhood Shares after Crypto Price Fall

Ark Invest, the investment management firm led by Cathie Wood, took advantage of a decline of Robinhood shares last week on Wednesday, October 27, following the firm’s earnings and purchased almost $80 million in value.

Three of the Ark Invest’s funds (ARK Innovation, ARK Next Generation Internet, and ARK Fintech Innovation ETF) purchased a collective 2.29 million shares of RobinHood for $79.4 million.

Wood’s Ark jumped on a 10% decline in retail-trading platform Robinhood and bought a total of 2.29 million Robinhood shares spread across its three funds. ARK Fintech Innovation ETF purchased 140,664 shares of Robinhood, ARK Innovation ETF added 914,957 shares, and ARK Next Generation Internet ETF purchased 236,190 shares.

On Wednesday last week, Robinhood trading platform announced a decline of 78% of its cryptocurrency revenue – from $233 million in Q2 to $51 million in Q3 – the dip drove the prices of the company’s shares down below its July initial public offering price of $38.

The firm caused disappointments to investors when it announced its Q3 earnings which missed expectations because of a drop in its cryptocurrency trading activity from all-time highs witnessed in the previous quarter.

Earlier in the week, Ark Invest also sold some of its Tesla holdings – a total of 57,106 shares of Tesla stock, worth $59 million – when the electric carmaker hit a market valuation of $1 trillion. Wood has been clear about her bullish prediction on Tesla. In March, the Ark boss predicted that Tesla stock would hit $3,000 from around $1,000 which it stands currently.

Furthermore, Ark also purchased the dip with $60 million in Twitter stock on Wednesday last week after the popular social media firm disclosed a drop in its customer base in its earnings report, causing the price of the company’s shares to fall by almost 11%.

Bitcoin ETF Investing

While Ark Invest is big on crypto assets, investing in Bitcoin and crypto-related stocks such as the Grayscale Bitcoin Trust, Coinbase, Tesla, Square, and RobinHood, the firm did not buy the newly-launched US Bitcoin futures ETF.

As reported by Blockchain.News on October 21, Cathie Wood disclosed that Ark Invest did not join the buying frenzy around the ProShare Bitcoin Strategy ETF. The renowned US investor stated that tax ramifications informed her decision to take time to understand the tax implications.

However, Ark Invest has its own plans in the Bitcoin ETF space. In June, the company joined a long list of firms seeking the SEC’s approval to launch a US Bitcoin ETF, which is pegged to the current price of the cryptocurrency while allowing investors exposure without actually purchasing and taking custody of the crypto asset.

1Bn Crypto Users Forecasted in the Next Decade, Says Coinbase CEO

Brian Armstrong, CEO of Coinbase Global Inc, said there would be as many as 1 billion users of cryptocurrencies within the next decade.

Bloomberg reported, citing Armstrong’s remarks during a commentary about price volatility related to the cryptocurrency market at Monday’s Milken Institute Global Conference.

There are currently only about 200 million users of cryptocurrencies in the global market.

During the meeting with Cathie Wood, the CEO of Ark Invest, who made a bullish prediction on bitcoin Ryan Armstrong said:

“My guess is that in 10-20 years, we’ll see a substantial portion of GDP happening in the crypto economy,”

DeFi is able to provide almost all financial services, with traditional and central institutions, usually banks, but on the blockchain. Any traditional service provided by a financial institution can be provided through DeFi. In short, Defi is a blockchain-based financial service mirrored by conventional financial services, creating new services or derivatives derived from the unique capabilities of blockchain. Because Defi does not require intermediaries like traditional banks, it can freely trade tokens or borrow tokens.

Meanwhile, Wood believes Bitcoin to be a game-changer by explaining why the cryptocurrency is soaring and gaining traction as a hedge, saying that she considers decentralized finance is great promising, urging the industry to look up to the issue of talent acquisition by adding that:

“In the case of DeFi and next-generation internet, we are seeing a lot of financial companies losing talent to crypto. So they have to take it seriously, or else they are going to be hollowed out.”

As the cryptocurrency market continues to expand, Coinbase has taken steps to expand its footprint to the rest of the world by acquiring and investing in large exchanges elsewhere.

In March, Coinbase reportedly announced plans to acquire a Brazilian holding company called 2TM, the parent company of Mercado Bitcoin – a Bitcoin exchange platform from Brazil – which is regarded as the largest crypto exchange in the Latin American region.

Ark Invest Refiles Application for Bitcoin Spot ETF Alongside 21 Shares

Ark Investment Management, the investment company, tagged with Cathie Wood, is taking another dig at a spot Bitcoin Exchange Traded Fund (ETF) product.

This latest application is still filed in partnership with European ETF issuer, 21Shares. It came after about a month when the United States Securities and Exchange Commission (SEC) rejected the application for the same product.

The new application contains a proposed rule change from the Chicago Board Options Exchange (CBOE) BZX Exchange, and per Bloomberg ETF analyst Henry Jim, the SEC has until January 24, 2023, to either approve or reject the ARK 21Shares Bitcoin ETF.

The race for a spot Bitcoin ETF has continued to heat up, despite the US SEC consistently rejecting a series of applications for such a project. The investment management firms that have been applying for these ETFs said the demand for the product is on the rise amongst Bitcoin investors, a scenario that shows that many are still not satisfied with the ProShares Bitcoin futures ETF product approved last year alongside others.

Ark Invest rejoining the race for the approval process is a bold one and the firm assured that its product seeks to “achieve its investment objective, the trust will hold Bitcoin and will value the shares daily based on the index.”

Besides Ark Invest, Grayscale Investments is also awaiting the final decision to convert its Bitcoin Trust into a full-fledged Bitcoin spot ETF. Under the leadership of Michael Sonnenshein, the company has taken a more proactive approach, launching a campaign that will get members of the public to send messages compelling the SEC to say ‘YES’ to its application.

Should the SEC disapprove, Sonnenshein said he is ready to take the regulator to court, which showcases that the investment expert sees no distinction between the GBTC, futures-based ETF, and the spot ETF application proving too hard to get.

US SEC Rejects One River Spot Bitcoin ETF Application

The United States Securities and Exchange Commission (SEC) has rejected the spot Bitcoin Exchange Traded Fund (ETF) Application filed by One River Asset Management.

The decision by the regulator to reject the application for a rule change to list One River Carbon Neutral Bitcoin Trust on the New York Stock Exchange Arca came a few days earlier than the anticipated June 2nd.

According to the SEC, the application did not address the core concerns bordering on price manipulation noting that the company utilized “the same standard used in its orders considering previous proposals to list bitcoin-based commodity trusts.”

Additionally, the SEC said it was not convinced about One River Asset Management’s fraud prevention measures and the decision was made irrespective of crypto valuation.

“…disapproval of this proposed rule change does not rest on an evaluation of whether bitcoin or blockchain technology more generally, has utility or value as an innovation or an investment.”

The rejection of One River’s application is a strong testament to the fact that the SEC is not ready at this time to approve a spot Bitcoin ETF. While it is unclear the measures the SEC hopes to make before it can approve a full-fledge spot ETF, Hedge Funds and managers looking to break this record are largely unrelenting in their push.

After its Bitcoin ETF was rejected back in early April, Ark Investments and 21Shares have refiled their application in what is hoped will meet the SEC’s requirements. Grayscale Investments is also expecting replies from the SEC with respect to the conversion of its Grayscale Bitcoin Trust (GBTC) to a full-fledged crypto ETF.

Beyond his optimism, Grayscale’s CEO, Michael Sonnensheim has employed a series of targeted market advertisements and strategies to force the SEC’s hand in approving its products. Failure to do this might see the Michael-lead company take the SEC to court as threatened.

For One River, the rejection came despite the firm’s board playing host to Jay Clayton, the former SEC Chairman.

Cathie Wood's Ark Invest Offloads Coinbase & Robinhood Shares

Coinbase Exchange and commission-free stock brokerage, Robinhood appears to be losing the support of one of its biggest investors, Ark Invest, the investment vehicle owned by Wall Street veteran Cathie Wood.

According to the latest trade filing by the asset management firm, a little more than 1.4 million shares of Coinbase were sold, amounting to about $75 million based on the price at the close of trading on Tuesday.

The entirety of the 1.4 million Coinbase shares was not pulled from one single investment vehicle but rather from the Ark Innovation ETF, fintech innovation, and the next-generation internet ETFs.

Following the debut of Coinbase on public bourses last year April, Cathie Wood began accumulating the company’s shares in her trust in the future that the exchange was pioneering. Since the first accumulation, Coinbase shares had been nosediving, and its trend has now gotten much worse this year with the continuous onslaught the crypto ecosystem has seen thus far this year.

Cathie Wood is a prolific investor in innovative tech stocks, particularly in those with a level of exposure to Bitcoin and the crypto ecosystem. She has invested in Robinhood, Block Inc (formerly Square), and Tesla Inc, known as one of the first firms that stacked up Bitcoin on its balance sheet.

With the encompassing slump in the broader digital currency ecosystem, which has seeped into the stocks that constitute Ark Invest’s portfolio, the company’s investment vehicles have also seen a dramatic fall across the board. While the Ark innovation ETF has plunged by as much as 57.74% year-to-date, the next-generation internet and fintech innovation vehicles have shed off 58.7% and 62.14%, respectively.

Ark Invest also sold off $500,000 worth of Robinhood shares based on Tuesday’s closing price of $8.43. This targeted selloff is an indication that the investment vehicle is looking to taper down its exposure to presumably risky assets per their links to the nascent crypto ecosystem.