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Why Cathie Wood Is Dumping Coinbase Shares for Robinhood

2 mins
Updated by Geraint Price
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In Brief

  • Cathie Wood sells her third tranche of Coinbase shares after the company's share price spiked following the indictments against Binance.
  • Wood also bought Robinhood shares, even as the company's crypto revenues dropped amid US regulatory action, prompting a European launch.
  • Wood's ARK Invest is launching five crypto ETFs that track mainly crypto futures, even as the they wait for an SEC ruling on a spot ETF.
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ARK Invest, led by Cathie Wood, has sold $5.3 million worth of Coinbase (COIN) shares after COIN’s price surged following US litigation against Binance. On Monday, ARK Invest sold 43,956 shares from its ARK Fintech Innovation exchange-traded fund (ETF), a move that does not appear to be the result of a change in Wood’s bullish Bitcoin (BTC) outlook.

Cathie Wood sold Coinbase shares for the third time this year, offloading $5.3 million worth to scoop up $1.2 million in Robinhood shares instead. This is the third time one of her funds has done so this year, after selling $103 million worth in July and 65,376 shares in October.

Wood May See Profit Potential in Robinhood

According to Bloomberg ETF expert Eric Balchunas, the sales do not mean Wood has lost faith in Bitcoin. Rather, ARK likely sold shares to adjust the weighting of Coinbase stocks in some of its ETFs. Its earlier sales of Grayscale Bitcoin Trust (GBTC) were also on the back of an increase of 76% in the share price, suggesting Wood was offloading winners to maintain the weighting of GBTC in her ETF baskets.

“With ARK you gotta look at weightings history before you begin your interpretation… ARK *has* to sell many shares to keep a 9%-ish weighting,” Balchunas wrote.

Buying Robinhood shares means that Wood sees potential in the stock and crypto brokerage despite a decline in crypto revenues. Robinhood reported a 26% drop in crypto trading revenues amid its delisting of Cardano, Polygon, and Solana this year. During its earnings report, CEO Vlad Tenev said the company is planning to roll out its app in Europe, which could spike its share price and bag Wood a handsome profit.

Coinbase Stock Grown Over 200% Compared to Robinhood
Coinbase Stock Has Grown Over 200% Compared to Robinhood | Source: Wall Street Journal

Read more: How to Buy and Sell Crypto on Robinhood: A Step-by-Step Guide

ARK Still Bullish on Bitcoin

While the sales have prompted speculation on Wood’s Bitcoin thesis, her earlier bullish views appear intact. ARK Invest and 21Shares beat BlackRock to a Bitcoin spot ETF application, filing it in April. Wood said in an interview that ARK and 21Shares plan to launch five crypto exchange-traded products on the Cboe exchange.

“The strategies are going to be around Bitcoin futures, Ethereum futures… Bitcoin futures and cash, Ethereum futures and cash, and Bitcoin and companies that invest in digital assets.”

ARK Invest CEO Cathie Wood: Most People Understand That Bitcoin Is The “Money Revolution.” Source: YouTube

In her view, the crypto bull market is “already underway.” She predicted that Bitcoin will outperform shares of crypto-related equity investments in the long term.

She added that ARK’s partner, 21Shares, is the biggest crypto ETF provider in the world. The US Securities and Exchange Commission (SEC) deadline to rule on the ARK 21Shares Bitcoin ETF application is Jan. 11, 2024.

Read more: How To Prepare for a Bitcoin ETF: A Step-by-Step Approach

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David Thomas
David Thomas graduated from the University of Kwa-Zulu Natal in Durban, South Africa, with an Honors degree in electronic engineering. He worked as an engineer for eight years, developing software for industrial processes at South African automation specialist Autotronix (Pty) Ltd., mining control systems for AngloGold Ashanti, and consumer products at Inhep Digital Security, a domestic security company wholly owned by Swedish conglomerate Assa Abloy. He has experience writing software in C,...