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The crypto market has seemingly blown past the brief contagion that set in towards the end of last week and through the weekend following the shutdown of Silvergate bank and the near-crash of Silicon Valley Bank. The pair had heavy involvement in the sector through business dealings with crypto companies. Alongside others banking institutions like Signature bank that have been receptive to crypto, the two formed a vital cog that sustains the digital assets’ ecosystem hence the chaos ensuing after the concerning reports around them surfaced.
Notwithstanding the induced volatility witnessed in the market in March, Ark Invest has added to its bet on the sector. The firm particularly considers crypto one of the promising disruptive technologies to look out for this year.
Full of confidence in crypto company stocks performance
Ark Invest, founded by Cathie Wood, has persisted with its investment strategy entailing crypto-related stock. A Mar 13 trade filing shows that the investment management and advisory services provider this week acquired another 92,165 shares of Block for its three funds. The purchase of the mobile payment company’s stock set back the firm roughly $6.4 million based on Monday’s prices. The Ark Innovation exchange-traded funds (ETF) received the bulk of the buying ~ 77,991 shares. The Ark Next Generation Internet ETF basket got an additional 13,170 shares, with the rest going to the Ark Fintech Innovation ETF.
Block reported a relatively strong BTC revenue position despite the price downturn in Q4
Last month, Jack Dorsey’s Block reported $1.83 billion in Bitcoin revenue for its Cash App unit (token sales to customers) in the fourth quarter of 2022. The figure meant a slight 7% decrease from the previous year but was higher than the $1.76 billion reported in the third quarter of 2022. According to Block's quarterly shareholder letter, the mobile payments service also generated $35 million in Bitcoin gross profit for the quarter, down 25% from the previous year and slightly lower than the $37 million reported in Q3.
Despite seeing a decline in bitcoin revenue and gross profit, the payments processing firm reported a relatively strong revenue position for 2022. Cash App brought in $7.11 billion in Bitcoin revenue ($156 million in Bitcoin gross profit), translating into nearly 30% declines for both metrics from the previous year. Block also said it incurred a $9 million impairment charge on its BTC investment in Q4, up from $2 million in the previous quarter. It recognized a crypto impairment loss of $47 million for the entire year of 2022.
Ark Invest’s Coinbase share acquisition
ARK Invest has habitually defied market trends by consistently purchasing significant volumes of downbeat shares. Wood’s bullish take on the crypto industry has remained unwavering, evidenced by the investment in crypto-related stocks, including Coinbase. ARK acquired 301,437 shares of Coinbase worth $17.5 million for its Ark Disruptive Innovation exchange-traded fund (ARKK) and purchased a further 52,525 shares for $3 million for its ARKW ETF on March 9, according to a message sent to investors.
Prior, the company had procured 333,637 shares in January. The most recent acquisition thus means the company has accounted for roughly 30% of total Coinbase stock buys this year. Focused on investment in innovative tech stocks, Wood is considered one of the most prominent crypto enthusiasts worldwide. She firmly believes Bitcoin has significant potential as a risk-on asset and will eventually reach $1 million. The recent investment in Coinbase affirms her confidence in the future of the cryptocurrency industry.
“The crypto team at ARK Invest are not surprised that BTC and ETH appreciated as US regional bank stocks imploded,” she wrote in a Mar 13 tweet reacting to the market rally, adding, “Their blockchains are decentralized, transparent, and auditable. Banks are not and, in the last few days, have become less so.”
Wood’s investment strategy has positioned the firm as one of the most influential investors.
Robinhood stock scoop
ARK’s latest investments have also gone to Robinhood stock (adding 265,566 shares worth $2.5 million for its ARKK fund on the same day), consistent with its commitment to emerging technology and innovative platforms. Nonetheless, this resolve has brought significant losses to most of the firm’s crypto portfolio.
The asset manager has made significant investments in crypto exchange Coinbase, spending more than $30 million on it in February. According to a Feb 23 filing, Ark bought an additional 63,585 COIN shares across two funds. The Ark Innovation ETF added 53,783 Coinbase shares, while the Ark Next Generation Internet ETF reflected an additional 9,802 shares. The recent investments by Ark Invest in Coinbase corresponded to the exchange launching its Ethereum layer two scaling solution Base.
The firm's increased buy into Coinbase stock also comes when reports indicate that more than 70% of its $310 million in historical fee revenue was collected after ARKK's value dropped nearly three quarters from its peak in February 2021. Worth noting, the bullish sentiment held by the Ark Invest executive is shared by many. Investors have stuck with and even injected more funds into the firm’s flagship fund (ARKK) despite shedding significant value from its record highs. This year, Ark Invest has averaged $230,000 in daily fees from its devoted followers.