2.15pm: Cathie Wood's ARKK fund takes Coinbase profits at 15-month highs
Fund manager Cathie Wood has been on a Coinbase Global Inc (NASDAQ:COIN) profit-taking spell of late, having dumped around US$26mln (£19.8mln) worth of shares, according to Morningstar analysis.
When looking at Coinbase’s recent performance, the strategy appears to be a sensible one.
Coinbase, which is the second-largest cryptocurrency exchange by trading volumes and the only one listed on a major stock market, has been on an absolute rip in 2023.
Currently changing hands at US$105.55, its share price has more than tripled year to date, bringing Conbase to 15-month highs.
Despite the profit-taking, Coinbase remains the second-largest holding in Cathie Wood’s flagship Ark Innovation ETF (ARKK), behind Tesla and in front of e-commerce platform Shopify and restaurant-management software group Square.
Wood’s ARKK fund owns 4.16% of all of Coinbase’s shares for a market value of around US$818mln.
However, even with the recent rally, the cost average on ARKK’s existing Coinbase shares is more than US$254 per share, making for current realised losses in excess of one billion dollars.
Wood remains bullish on Coinbase’s prospects.
Speaking to Bloomberg on Monday, she pointed recent rulings made in the long-running securities dispute between Ripple Labs, the developer of US$40bn XRP cryptocurrency, and US regulator the Securities and Exchange Commission (SEC).
“We’re very positive on Coinbase, especially in light of the court ruling for Ripple and against the SEC,” she said, alluding to last week’s ruling that public XRP sales do not constitute securities contracts.
Even though the ruling was not absolute, and the dispute is expected to go to trial, Wood said it was, by and large, “very positive for exchanges”.
10.30am: Bitcoin and Ripple face headwinds
Ripple (XRP) has been at the top of the crypto trending tables for the past week, ever since developer Ripple Labs claimed a (misguided or not) partial victory from the New York courts in its ongoing dispute with the Securities and Exchange Commission (SEC).
Even though last Thursday’s massive 73% surge to US$0.94 has since chopped back to below US$0.75, that still represents a nearly 60% week-on-week rally.
Without similar tailwinds, benchmark cryptocurrency Bitcoin has cut a bearish path, with the BTC/USDT pair set to post the fifth straight day of losses on the spot market.
The pair closed 0.3% lower yesterday, but more worryingly, has been trading below the critical US$30,000 price point this morning after dipping another 0.6%.
Binance’s order book does show a large tranche of support at the US$29,500 price point, which should help to stem further losses.
Bitcoin gets knocked below 30k – Source: currency.com
Of course, when looking at the longer timeframe, bitcoin is a far more sustainable bet over Ripple (XRP), but both with recent headwinds emerging from China, concerns are mounting for the risk-on profile of cryptoassets as a whole.
China’s post-Covid recovery appears to be not happening the way markets had hoped, with yesterday’s gross domestic product data read significantly underperforming against forecasts.
In itself, this is hardly a cause for concern in the crypto markets, but as a globally important economy, China’s economic cooling could stem the wider recovery of global risk assets.
Sustained regulatory threats from the US regulators against most major fiat-to-crypto on-ramps also cannot be ignored.
Furthermore, it should be noted that the US dollar’s 15-month low has not translated into near-term bitcoin upside.
Bitcoin’s sideways trading channel between 30k and 31k has gone on for nearly a month now; historically speaking, a breakout higher or lower is imminent.
The market is watching closely.
Briefly touching on Ethereum (ETH), the world’s second-largest cryptocurrency is also in its fifth straight day of red candlesticks.
The ETH/USDT pair closed 0.6% lower yesterday and dipped a further 0.7% to US$1,897 in this morning’s Asia trading session.
Global cryptocurrency market capitalisation currently stands at US$1.2tn, with bitcoin dominance above 50%.