blockworks.co
Ark Invest has sold off more than 1.5 million shares of Coinbase stock so far this month at the end of a year in which the stock price has seen major gains.
The firm has offloaded even more shares of the Grayscale Bitcoin Trust (GBTC) in that span.
Coinbase’s stock price was trading roughly $184 on Wednesday at 12 pm ET, up nearly 54% from a month ago and 449% year to date. That makes Ark’s Coinbase stock sales this month — totaling 1,535,789 as of Dec. 26 — worth about $282.5 million, according to Blockworks’ review of trade notifications.
The asset manager has long been bullish on Coinbase, particularly after Coinbase partnered with fund giant BlackRock last year.
Coinbase’s subscription and services revenue — generated from stablecoins and custodial fees, as well as blockchain rewards and interest income — topped its transaction revenue in the second and third quarters.
Read more: Coinbase Q3 results signal its future as ‘crypto super app’: Analyst
The vast majority of Ark Invest’s Coinbase sales — 1,348,527 shares — came from its Innovation ETF (ARKK). Coinbase is still the largest holding in that fund, with 10.7% of the fund’s assets allocated to the company.
The firm’s Next Generation Internet ETF (ARKW) has sold 129,871 shares of Coinbase in December, while its Fintech Innovation ETF (ARKF) has sold 57,391 shares of the stock. The Coinbase current position in ARKW and ARKF remains at roughly 12% and 14%, respectively.
“Ark took a contrarian approach and bought many [Coinbase] shares earlier this year when the stock was under tremendous pressure,” said Owen Lau, executive director at Oppenheimer & Co. “Year to date, Coinbase is up by over 400%, and [it’s] a good time to take some profit from a return and risk management perspective.”
Morningstar analyst Michael Miller agreed the price is likely the biggest driver of Ark’s continued selling. He added that while trading volume has increased, an unanswered question heading into Coinbase’s next earnings call is how much of the activity is from retail users, and their average fee rate.
“This isn’t to say that Coinbase hasn’t benefited from the shift in cryptocurrency sentiment,” Miller told Blockworks. “It’s a question of how much, and if it’s enough to justify a pretty extreme movement in the shares.”
Offloading GBTC too
Ark Invest also has continued shedding its holdings of the GBTC.
ARKW has sold 2,118,186 shares of the investment product this month, trade disclosures show. The fund’s current position in GBTC amounts to about 4.3%.
The value of those shares, as of mid-day Wednesday, was roughly $77 million.
GBTC launched in 2013 and has roughly $26 billion assets under management. Grayscale has said GBTC is ready to operate as an ETF when the US Securities and Exchange Commission gives the firm the go-ahead to list it as one.
Read more: A look at crypto ETF milestones in 2023 — and where spot bitcoin funds stand
Until then, eligible shares of GBTC are quoted on the OTC Markets Group. The value at which those are sold has fluctuated in the form of premiums and discounts to the value of bitcoin that it holds.
The discount at which GBTC shares trade compared to its net asset value were roughly 5.5% on Tuesday, according to YCharts.com data — the lowest level since 2021.
Bloomberg Intelligence analysts said in a research note last month that Ark Invest could choose to sell its current positions in the GBTC and port those assets over to the spot bitcoin ETF it is also looking to launch.