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Cathie Wood’s Ark Invest Loads Up on Crypto Stocks Amid Market Slump

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Cathie Wood’s Ark Invest Loads Up on Crypto Stocks Amid Market Slump


The Tuesday purchases followed a heavier round of acquisitions on Monday, during which Ark Invest loaded up on crypto-related shares worth more than $71 million.

The broader digital asset market is in a bearish state, but some experts are leveraging the dip to expand their crypto exposure. Cathie Wood’s investment management company, Ark Invest, is one of them, having scooped up thousands of shares linked to crypto firms over the last few trading days.

According to the latest trade filing from Ark Invest, the firm spent over $19 million to purchase additional crypto-related stocks through its exchange-traded funds (ETFs) on February 3. The acquired shares are tied to multiple companies, including the stablecoin issuer Circle, crypto exchanges Coinbase and Bullish, and Ethereum treasury firm Bitmine.

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Ark Invest Buys Crypto Stocks

On Tuesday, Ark Invest bought 145,488 Bitmine shares for $3.25 million and 125,218 Bullish shares for $3.46 million. In addition, the company purchased 42,878 Circle shares for $2.4 million and 3,510 Coinbase shares for $630,606. Notably, Ark Invest also tapped into the Bitcoin-focused tech entity Block Inc. and financial services firm Robinhood, buying shares totaling 31,202 and 89,677 for $1.77 million and $7.8 million, respectively.

The Tuesday purchases followed a heavier round of acquisitions on Monday. Ark Invest had scooped up crypto-related shares worth more than $71 million.

Similarly, the Monday buys included shares of Coinbase, Circle, Bitmine, Robinhood, Bullish, and Block Inc. The firm made these purchases through several ETFs, including ARK Blockchain & Fintech Innovation ETF (ARKF) and ARK Innovation ETF (ARKK).

Market Crashes as BTC Declines

Ever since bitcoin (BTC) began its descent late last year, crypto stocks have followed suit. Data from Trading View shows that the stocks of most crypto-related companies are down by double digits over the last three months. Their decline has intensified as BTC remains below $90,000 and faces the risk of plummeting under $60,000. At the time of writing, the leading digital asset was changing hands at $76,000, down 17% monthly and 14% weekly.

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While BTC and the broader market continue to decline, Ark Invest has been on a buying spree. The asset manager has spent millions of dollars on crypto-related stocks in December and January. From the look of things, the company is likely to continue buying crypto stocks for as long as the bearish season lasts.

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Crypto World

Bitcoin Hit $76K But Did Bulls Fall Into A Trap?

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Bitcoin Hit $76K But Did Bulls Fall Into A Trap?

Key takeaways:

  • The US Federal Reserve’s shift toward balance sheet expansion may provide the liquidity needed to boost Bitcoin and broader risk markets.

  • The war in Iran and high oil prices might be driving investors toward scarce assets to hedge against rising inflation.

On Tuesday, Bitcoin (BTC) price surpassed $76,000 for the first time in over two months, triggering $285 million in leveraged short liquidations. The rally closely tracked the S&P 500, indicating a high probability of a macroeconomic-driven event. Is the war in Iran the only factor behind Bitcoin’s price gains, and what are the odds of a bull trap?

Crude Brent oil (inverted, left) vs. Bitcoin/USD (right). Source: TradingView

Crude oil prices stabilized near $95 after peaking at $104 over the weekend, a move many traders view as positive. The inverted chart of crude oil prices depicts a high-intraday-correlation environment.

The war in Iran has been a major source of concern due to its impact on US inflation and supply chain logistics, which limits the ability of global central banks to trim interest rates and exerts negative pressure on economic growth. 

Simultaneously, gains in the S&P 500 and gold prices likely indicate a higher probability of stimulus measures, causing investors to seek shelter in scarce assets.

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Gold futures (left) vs. S&P 500 futures (right). Source: TradingView

The recent gains in the S&P 500 following failed negotiations to reopen the Strait of Hormuz may seem odd, but the added risk of recession provides the strongest incentive for governments to implement expansionary measures. Regardless of whether the US Federal Reserve opts for a cautious approach, the US Congress and the Trump administration can authorize direct investment in infrastructure projects and social programs, or provide tax credits.

Inflationary worries line up with investors’ Fed policy expectations

Bitcoin does not need to compete with stocks or even gold to capture the capital currently held in money market funds and short-term bonds. The longer oil prices remain above $90, the higher the upward pressure on forward inflation.

Reduced expected returns on fixed-income assets may be the primary catalyst behind Bitcoin’s surge above $75,000, and governments have few alternatives without expanding the monetary base.

US Federal Reserve total assets, USD billion. Source: St Louis FED

The US Fed changed its strategy to expand the balance sheet in January, reversing the trend from the previous two years. This move is highly supportive of risk markets, as short-term concerns about the bond market are diminishing. Financial institutions and hedge funds have greater access to liquidity and face less competition to offload US Treasuries, providing temporary relief to the stock market.

Regardless of whether Bitcoin holds above $75,000, there are few incentives for traders to take profits after two months of trading near $68,000, given the meager 10% gains. Even if Bitcoin eventually rallies to $80,000, that would represent a modest 20% gain for those who purchased at $66,500. Unless traders perceive an imminent risk to oil prices, the odds do not favor continued sell pressure on Bitcoin.

Related: Bitcoin’s struggle to build long-lasting uptrend continues–Here’s why

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Ultimately, given the likelihood of expansionary monetary policy and inflationary pressures, Bitcoin bears will have a difficult time showing strength, making the odds of a successful bull trap extremely low.