Various headwinds had already made 2022 a torrid year for crypto stocks like Coinbase. The collapse of rival exchange FTX has thrown the sector into further chaos. Despite this, Cathie Wood is buying the dip, saying bitcoin can hit $1 million by 2030.
– Despite crypto troubles, Cathie Wood buys Coinbase shares
– “Crypto is dead”, says Dan Dolev, analyst at Mizuho
– Coinbase is the second largest holding of the Bitwise Crypto Industry Innovators ETF
Coinbase global [COIN] stocks continue to tear up by Cathie Wood‘s Ark Invest, despite, or perhaps because of, the sharp decline in cryptocurrency prices.
Coinbase‘Shares of s fell 85.5% in the year to Dec. 16 and 25% in the month before that date. Nevertheless, the wood‘s Ark Innovation ETF [ARKK] bought 78,982 shares worth about $3.2 million during the week of Dec. 5, followed by another 297,000 on Dec. 14. The second accompanied a purchase of 75,000 You’re here [TSLA] shares.
Wood has earned a reputation for buying downside stocks and the themes it backs, and appears to be enjoying the turmoil the FTX exchange collapse has caused in crypto markets. Bitcoin [BTC-USD]which Wood predicts could hit $1 million by 2030, closed Dec. 16 at $16,757.98, down 63.8% for the year.
Crypto Firms Hold On For Life
Various outside forces were already weighing heavily on Coinbase‘performance before the FTX bomb explosion. Its third-quarter shareholder letter dated Nov. 3 (as does FTX‘s problems have been revealed) quoted “macroeconomic factors,” an abandonment of US-enabled exchanges by crypto traders, and an increase in ‘Hodl‘ing (hold for dear life) behavior like headwinds against his performance. Coinbase‘s revenue fell 53.4% year over year and EBITDA fell from $618 million in profits to losses of $116 million.
Looking back, crypto‘s struggles had just become apparent by this point. Coinbase‘s shares had already fallen 77.9% for the year, and while they had risen 5.4% on November 4, the day after the third quarter results were announced, they fell another 37 .8% since.
Coinbase has rushed to cut costs this year, laying off 1,100 employees in June, or 18% of its workforce. CFO Alesia Haas said the company has contingency plans in place in case the crypto winter drags on, but these will depend on whether there is a market to emerge in when spring finally arrives. .
FTX Collapse Weighs on Crypto Investing Theme
Circumstances around FTX‘The company’s collapse, which led to the arrest of its founder Sam Bankman-Fried on criminal charges, should at least lead to tougher regulation of crypto businesses. At worst he could see “contagion” spreading through the crypto ecosystem.
Haas told the the wall street journal this “we‘We’re going to see a regulatory trend in the United States and around the world. There is an argument that this could benefit Coinbase. CEO Brian Armstrong recently assured clients that their assets were “backed 1:1” on the exchange, making it a safe haven from FTX.
Piper Sandler analyst Richard Repetto argued in a note seen by CNBC than Coinbase “could even capitalize on the upheaval of FTX’s bankruptcy in the long term”.
Mizuho analyst Dan Dolev disagrees. “Crypto is dead,” he said CNBCadding that “investing in Coinbase is just a waste of time. Dolev argued that consumer interest in crypto has plummeted, much like it happened to tech stocks after the dotcom bubble.
“It took five years for people to come back to [tech] stocks, and they were real businesses,” he said. Without consumer trust, Dolev suggested, cryptocurrencies have no value.
Fund Spotlight: Bitwise Crypto Industry Innovators ETF
Coinbase is the 14th largest holding company in the ARK Innovation ETF [ARKK] as of December 16 with a weighting of 3.44%. The fund fell 64.8% on the year to December 16. ARKK is a generalist disruptive innovation fund, exposed to various themes favored by Wood, in particular electric vehicles via its second holding Tesla and biotechnology via its third holding. Exact Sciences [EXAS].
Investors looking for greater exposure to Coinbase and cryptocurrency innovation can select the ETFs Bitwise Crypto Industry Innovators [BITQ]. Coinbase is BITQ‘s second position on December 15 with a weighting of 9.96%.
The BITQ has fallen 82.5% in the year to Dec. 16. His superior outfit, MicroStrategy [MSTR], has a weighting of 12.26%. Although primarily a software company, MicroStrategy became the first public company to adopt bitcoin as its primary reserve asset in 2020. As of September 19, it held 130,000 bitcoins (acquired for around $4 billion). dollars).
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