Ark Invest Analysts Share Bullish Outlook for Coinbase, Block

Investment firm says Coinbase-BlackRock partnership is “by far the strongest signal” for institutional interest in crypto

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Ark CEO Cathie Wood | Blockworks exclusive art by Axel Rangel

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key takeaways

  • Bitcoin’s price could surge between $200,000 and $500,000 if institutions together allocated between 2.5% and 6.5% of their portfolios to BTC, Ark found
  • Block’s Cash App tipped to enjoy long-term growth in part thanks to its bitcoin offerings

Coinbase’s partnership with BlackRock could be a catalyst for bitcoin’s price to rise by up to $500,000, according to Ark Invest analyst Yassine Elmandjra. 

The innovation-focused fund manager doubled down on Ark’s bullish bitcoin projection after BlackRock, the world’s largest asset manager, revealed it would offer institutional clients access to bitcoin via Coinbase Prime.  

BlackRock’s Aladdin platform, where bitcoin will be offered, supports nearly $22 trillion in assets managed by 55,000 investment professionals, according to Ark Invest. 

“This is I’d say by far the strongest signal we’ve seen around institutions considering crypto as a new asset class and that Wall Street is finally ready to make the leap here,” Elmandjra said during a Tuesday webinar. “I think a partnership of this caliber could usher trillions of dollars into the crypto asset class in the coming years.”

Based on daily returns across asset classes during the past 10 years, Elmandjra added, Ark’s analysis suggests that an allocation to bitcoin in well diversified portfolios should range from roughly 2.5% when minimizing volatility, to 6.5% when maximizing returns per unit of risk.

Based on Ark’s simulations of one million portfolios composed of various asset classes, institutional allocations between 2.5% and 6.5% could impact bitcoin’s price by $200,000 and $500,000, respectively, the analyst said.

“This is definitely a big win for not just Coinbase, but for the broader crypto asset class,” Elmandjra said.

In late July, Ark Invest sold off roughly 1.4 million shares of Coinbase, worth about $79 million at the time. The SEC had just classified nine Coinbase-listed tokens as securities in a complaint alleging that a former Coinbase product manager and people close to him used classified information for insider trading

Coinbase shares were trading for $88 at 3:30 pm ET, down roughly 10% on the day. The stock has fallen 65% in the year to date but rallied 63% in the past month. Coinbase’s second quarter earnings call is scheduled for 5:30 pm ET Tuesday. 

Block’s Cash App ‘key part of bitcoin ecosystem’

Ark analysts remain bullish on Block, the fintech firm led by bitcoin bull Jack Dorsey, in part due to its long-term confidence in BTC.

Block posted net revenue of $4.4 billion in the second quarter, down 6% year over year. The decrease was driven by a reduction in bitcoin revenue for Block’s Cash App to $1.8 billion, down 34% from a year ago. Although, the company earns just 2% profit on its bitcoin services.

“[We] see Cash App up there as a key consumer-facing platform in the bitcoin ecosystem as a strong positive,” Ark Analyst Maximilian Friedrich said on the webinar. “We think that this position Cash App, as it relates to the bitcoin ecosystem in the future, should be a key driver in their growth and also a key driver in their international strategy, where they can use bitcoin to penetrate new markets.”  

Ark sold about 235,000 shares of Block from its Ark Innovation ETF (ARKK), the firm revealed in a Monday email. They would’ve been worth about $21 million at the time.

Ark’s flagship ETF, ARKK, currently weights Coinbase and Block at 4.65% and 4.9% of its $7.9 billion portfolio, respectively.


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