Sebastian Sinclair

Artificial intelligence continues to grip the imagination of traditional market participants over its potential to disrupt entire sectors of the economy, though crypto is still miles ahead this year.



Several crypto-related exchange-traded funds (ETFs) are up between 9% and 64% in year-to-date terms, beating out the more mildly performing AI ETFs, up between 4% and 32%.



Global X Robotics &amp; Artificial Intelligence’s ETF (BOTZ) for instance, is up 16% YTD while Cathie Wood’s ARK Autonomous Technology &amp; Robotics ETF (ARKQ) has risen 18%.



Taking a look at crypto funds — the picture of whose ahead becomes clearer. Of the 39 AI/robotics ETFs Blockworks analyzed, performance across the board averaged around 12.4%. Crypto’s ETF performance for the year is averaging around 38.3% — a difference of roughly 26%.



VanEck’s Digital Transformation ETF (DAPP), the sector’s best-performing fund, is up a whopping 67% since the new year began. DAPP’s top 15 holdings include the likes of Coinbase, Block Inc, Bitfarms and Riot Platforms — all listed on major US exchanges.



That’s followed closely by Global X’s Blockchain ETF (BKCH) at 64% YTD and Bitwise’s Crypto Industry Innovators ETF (BITQ) — up 61% over the same period.&nbsp;



Like DAPP, both funds track roughly the same publicly-traded crypto and blockchain firms, as the choice remains relative to its more developed and long-standing AI cousins.



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/12625850/embed#?secret=QiOEisD1Zt" data-secret="QiOEisD1Zt" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">DAPP is outperforming year to date, but BOTZ is a clear winner over the past year | Chart by David Canellis </figcaption></figure>



For the AI and robotics sector, performance is more muted, at least as the second month of the year gets underway.



Direxion Daily Robotics, Artificial Intelligence &amp; Automation Index (UBOT) is topping the list among best-performing AI-related ETFs this year, up 32%. But, it should be noted, UBOT features one of the lowest make-up of assets in its fund, when compared to its peers — totaling just $18 million.



Crypto funds total assets are also modest, averaging around $95 million, with one outlier — the $431 million Amplify Transformational Data Sharing ETF (BLOK) — up 25%.



By comparison, the average total funds in AI ETFs stand at roughly $5.89 billion, likely due to greater enthusiasm around the tech over crypto and blockchain, which is currently experiencing a lull.



Recently renewed interest in AI, courtesy of OpenAI’s ChatGPT 3 language model, Tesla’s self-driving cars and Jasper.ai’s ability to create art has led to an explosion of new business ideas.



An <a href="https://www.pwc.com/gx/en/issues/analytics/assets/pwc-ai-analysis-sizing-the-prize-report.pdf">analysis</a> by global “big-4” accounting firm PricewaterhouseCoopers (PwC) predicts the AI sector to contribute $15.7 trillion to the world’s gross domestic product by 2030.&nbsp;



Of that figure, roughly 6.6 trillion is likely to come from increased productivity while $9.1 trillion will derive from “consumption-side effects,” PwC said.



Cathie Wood’s Ark Invest expects blockchain and crypto to match that. The firm claims over the next 10 years, cryptocurrencies and smart contracts could command <a href="https://blockworks.co/news/ark-blockchains-are-future-of-money">$20 trillion</a> and $5 trillion in market value, respectively.



What does ChatGPT have to say about that?



<figure class="wp-block-image"><img decoding="async" src="https://lh4.googleusercontent.com/9WbaEpjf3I9rDmQKgT5Yvar9JIqML-lRVfct_pUGrwJHwN7lN9wHQxyux46xEYaY2lnVaW5EUENCCzfmt3Ky0pHIsxlK2dxPa6UCzJB9eua-Qk1fseKIxft8etusL-lopkXa2Z0jnv0j5Tw7dO_4qko" alt=""/></figure>



Fair enough.

Crypto ETFs Outperforming AI by 26% YTD

Bessie Liu

In the latest “Big Ideas” report by ARK Invest, the popular US asset manager claims blockchain will be one of the most significant technologies to shape an already technological era.



The report highlights 14 different technologies pegged to impact multiple sectors and serve as essential platforms for further innovation — including smart contracts and cryptocurrencies.



With global adoption, smart contracts and public blockchains will play a pivotal role in verifying digital scarcity and proof of ownership, Ark said.



“The financial ecosystem is likely to reconfigure to accommodate the rise of cryptocurrencies and smart contracts,” the report states.



“These technologies increase transparency, reduce the influence of capital and regulatory controls, and collapse contract execution costs.”



Ark has been a long-time supporter of crypto and blockchain. Its CEO Cathie Wood previously predicted that the price of bitcoin would reach $1 million by 2030.&nbsp;



The firm also boasts a <a href="https://blockworks.co/news/ark-invest-ftx-opportunity-for-coinbase">significant amount of shares</a> in top US exchange Coinbase, owning <a href="https://ark-funds.com/funds/arkk/">4.53%</a> of the company’s stock, representing roughly $347 million dollars.



<h2>An on-chain future driven by blockchain technology</h2>



The cryptocurrency industry has been continuously growing despite the collapse of prominent players in the market, which recently saw around $1.5 trillion wiped from the industry, the report said.



As the market slowly goes into recovery mode, Ark believes there will be a long-term opportunity for Bitcoin, DeFi and Web3. The firm claimed that over the next 10 years, “cryptocurrencies and smart contracts could command $20 trillion and $5 trillion in market value, respectively.”



The total value of all cryptocurrencies is currently just shy of $1.1 trillion; that figure would need to grow by 1,700% for Ark’s prediction to realize.



ARK pegged three revolutions of industry to get us there: upheavals across money, finance and the internet.



<h2>Money</h2>



The money revolution will see a movement away from fiat currencies and central banking systems into a global, more decentralized system. In particular, the report notes the long-term opportunity for Bitcoin is strengthening.



“Bitcoin’s volatility has obscured its long-term returns. Despite five drawdowns greater than 75% since its inception in 2009, bitcoin has delivered positive annualized returns over 3-, 4-, and 5-year time horizons,” Ark said.



Adding that, “the price of one bitcoin could exceed $1 million in the next decade,” more-or-less reiterating Wood’s bullish call.



<h2>Finance</h2>



On the finance side, there’s opportunity for decentralized financial (DeFi) to bring financial services to unbanked communities. Ark reasoned there are over 2 billion people who currently lack access to essential banking services.



“Financial services deployed on open protocols enable anyone with an internet connection access to custody, trading, and lending facilities,” the report said, “As insolvencies mounted across crypto lending businesses like Celsius and Voyager, decentralized lending markets like Aave continued to operate as designed.”



The report notes that if DeFi builders were to charge just a third of legacy finance rates — and financial services were to move to blockchain infrastructure at the same internet adoption rate in the early 2000s — the DeFi industry alone could be valued at $5.3 trillion by 2030.&nbsp;



<h2>Internet</h2>



ARK remains bullish on a potential internet revolution. Web2 thrives under tech monopolies that monetizes via user data — but this could change with the adoption of Web3 technologies which “introduces digital property rights for the first time.”



“Decentralized protocols enable the governance of — and open access to — distributed data, limiting central aggregator control,” the report said.&nbsp;



“Web3 embeds economics into software, enabling users to monetize and participate in network development.”



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The Future of Money and Contracts Is Public Blockchains: ARK

Ben Strack

Ark Invest said Coinbase is poised to benefit from the crash of rival exchange FTX despite near-term weak sentiment in the crypto space, as the fund group recently resumed buying the stock for its largest ETF.



While FTX’s fall, and the <a href="https://blockworks.co/news/sam-bankman-fried-arrested-in-bahamas" target="_blank" rel="noreferrer noopener">subsequent arrest Monday of its founder</a>, could delay certain developments in the space, Ark Research Director Frank Downing said during a webinar, Coinbase is set to thrive once regulatory clarity in the segment comes.



“We think that over the medium to long term, while the industry is set back now, Coinbase really will be a share gainer here as momentum and trust flows away from this kind of frontier in the international world to the more trusted, more regulated exchanges,” he said.&nbsp;



Unlike FTX, Downing added, Coinbase — as the largest publicly-traded crypto exchange in the US — produces quarterly financial statements and auditing firm Deloitte certifies that its assets are backed one-to-one.



“In an environment of tighter regulations, Coinbase’s standing could prove as a moat compared to some of its less regulated counterparts,” he said.&nbsp;



<h3>Buying more COIN&nbsp;&nbsp;</h3>



Ark Invest has eight ETFs trading in the US with combined assets of roughly $12.4 billion, according to ETF.com. Its largest ETF upped its position in Coinbase last week as centralized exchanges seek to offer more transparency in the wake of <a href="https://blockworks.co/news/whats-next-for-ftx-and-its-customers-after-bankruptcy-filing" target="_blank" rel="noreferrer noopener">FTX filing for bankruptcy</a>.



The fund manager bought 78,982 shares of Coinbase for its <a href="https://ark-funds.com/funds/arkk/" target="_blank" rel="noreferrer noopener">Ark Innovation ETF (ARKK)</a> — a position that represented nearly 0.05% of the fund.



Coinbase’s stock price — down about 84% year to date — was down about 9% Tuesday, as of 4:00 pm ET, setting a new low for the shares since the firm’s 2021 listing on the Nasdaq.



ARKK has nearly $7.7 billion in assets under management. The ETF is down about 64% year to date and down about 9% over the past month.



Coinbase stock made up 3.53% of ARKK, as of Tuesday — ranking 14th-highest of the ETF’s 31 holdings. The Coinbase shares in the fund have a market value of roughly $250 million.



An Ark Invest spokesperson did not immediately return a request for comment.



Owen Lau, an executive director at Oppenheimer &amp; Co., told Blockworks that the overall sentiment for Coinbase is weak after the collapse of FTX. But he likened that sentiment to those felt by financial giants such as Goldman Sachs and Morgan Stanley after the collapse of Lehman Brothers.&nbsp;



“It was actually a good time to buy the industry leaders,” Lau added. “It took time for these stocks to recover, and further downside risk is still uncertain, but Ark has a long investment horizon which could take advantage of the situation here for Coinbase.”



In late July, Ark Invest <a href="https://blockworks.co/ark-invest-sells-off-1-4-million-shares-of-coinbase-during-stock-plunge/" target="_blank" rel="noreferrer noopener">sold off roughly 1.4 million shares of Coinbase</a>, worth about $79 million at the time. The SEC had just <a href="https://blockworks.co/qa-the-sec-classified-9-tokens-as-securities-now-what/" target="_blank" rel="noreferrer noopener">classified nine Coinbase-listed tokens as securities</a> in a complaint alleging that a former Coinbase product manager and people close to him used classified information for <a href="https://blockworks.co/sec-charges-former-coinbase-product-manager-with-insider-trading/" target="_blank" rel="noreferrer noopener">insider trading</a>.&nbsp;



The following month, Ark Invest analyst Yassine Elmandjra said the company was <a href="https://blockworks.co/news/ark-invest-analysts-share-bullish-outlook-for-coinbase-block" target="_blank" rel="noreferrer noopener">bullish on Coinbase</a>, noting that the crypto exchange’s <a href="https://blockworks.co/news/blackrock-to-offer-institutional-clients-crypto-via-coinbase" target="_blank" rel="noreferrer noopener">partnership with BlackRock</a> could be a catalyst for bitcoin’s price to rise by up to $500,000.&nbsp;&nbsp;



On Nov. 8 and 9 combined — as news was circulating about FTX’s “liquidity crunch” and Binance’s potential buyout of the exchange — Ark Invest bought nearly 540,000 shares of Coinbase for ARKK. Crypto stocks, including Coinbase, <a href="https://blockworks.co/news/ftx-contagion-hits-crypto-stocks-following-binance-buyout" target="_blank" rel="noreferrer noopener">had plummeted</a> amid the developments.&nbsp;



<a href="https://blockworks.co/news/whats-next-for-ftx-and-its-customers-after-bankruptcy-filing" target="_blank" rel="noreferrer noopener">FTX filed for bankruptcy</a> on Nov. 11. A week later, on Nov. 18, Ark reported buying 255,000 more Coinbase shares for ARKK.



<h3>Exchanges seek transparency after FTX debacle</h3>



Ark Invest’s latest buy of Coinbase shares comes as rival exchanges have looked to offer more transparency in the wake of FTX’s crash.&nbsp;



Coinbase Chief Security Officer Philip Martin said in <a href="https://www.coinbase.com/blog/how-crypto-companies-can-provide-proof-of-reserves" target="_blank" rel="noreferrer noopener">a Nov. 25 blog post</a> that it was the only crypto company “providing the transparency and assurance of a public company financial audit.” He added that Coinbase was exploring more crypto-native methods to proving reserves and unveiled a $500,000 <a href="https://forms.gle/dVArtQ1dtbXH1oFF6" target="_blank" rel="noreferrer noopener">developer grant program</a> to incentivize others to do the same.



“For tomorrow we are working toward a decentralized system where you don’t have to trust us, or any institution,” Martin said at the time.



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Ark Invest Renews Coinbase Bull Case With Share Buys

<div id="highlights-block_6347f0f932f73" class="highlights">
 <ul>
 <li>Crypto separately managed accounts are the vehicle of choice for the many advisors wanting to dive into the space</li>
 <li>Ark continues to pursue spot bitcoin ETF, looks to invest in private crypto companies via its new venture fund</li>
 </ul>
 
</div>



Ark Invest intends to launch more crypto-related offerings, and is seeking to continue targeting the financial advisor segment that Chief Operating Officer Tom Staudt said has long been ignored by the crypto space.



Firms launching crypto separately managed accounts (SMAs) in recent weeks — <a href="https://cms.blockworks.co/ark-invest-jumps-into-crypto-sma-arena/" target="_blank" rel="noreferrer noopener">Ark Invest among them</a> — have cited advisors’ demand for actively managed crypto strategies that offer them ownership of the underlying asset and the ability to better manage taxes.



“Advisors have a very specific set of needs in order to integrate crypto with their overall book of business — the plumbing, the accounting, the security, the accessibility,” Staudt told Blockworks in an interview. “I think largely crypto has focused on direct-to-consumer, and it has been focused on hedge funds and institutions, and it’s left out kind of this largest part of the puzzle.”



Roughly $84 trillion is expected to pass primarily from baby boomers to members of Gen X and millennials through 2045, <a href="https://www.cerulli.com/press-releases/cerulli-anticipates-84-trillion-in-wealth-transfers-through-2045" target="_blank" rel="noreferrer noopener">according to Cerulli Associates</a>.



<a href="https://newsroom.bankofamerica.com//content/newsroom/press-releases/2022/10/bank-of-america-private-bank-study-finds-younger-investors-turni.html" target="_blank" rel="noreferrer noopener">A survey of wealthy Americans</a> published by Bank of America Private Bank Tuesday found that while investors over the age of 43 say US equities offer the best opportunity for growth, young investors think the greatest growth opportunities lie in digital assets. Roughly 47% of the latter investor segment reported having crypto holdings.



<blockquote class="wp-block-quote">“As consumers themselves become more educated, they’re going to demand this out of their advisors or else they’ll take their money elsewhere,” Staudt said.</blockquote>



“Advisors are going to be able to add greater value to investors when they have the full set of tools, and we are committed to the advisor channel to help them help their clients,” he said.



Keep reading for more excerpts from Blockworks’ Q&amp;A with Staudt.



<hr class="wp-block-separator has-alpha-channel-opacity"/>


<div class="wp-block-image">
<figure class="alignright size-full"><img decoding="async" loading="lazy" width="300" height="450" src="https://blockworks-co.imgix.net/wp-content/uploads/2022/10/2022-10-13-Staudt025.png" alt="" class="wp-image-34438" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2022/10/2022-10-13-Staudt025.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2022/10/2022-10-13-Staudt025.png?w=200 200w, https://blockworks-co.imgix.net/wp-content/uploads/2022/10/2022-10-13-Staudt025.png?w=171 171w, https://blockworks-co.imgix.net/wp-content/uploads/2022/10/2022-10-13-Staudt025.png?w=174 174w, https://blockworks-co.imgix.net/wp-content/uploads/2022/10/2022-10-13-Staudt025.png?w=146 146w, https://blockworks-co.imgix.net/wp-content/uploads/2022/10/2022-10-13-Staudt025.png?w=53 53w, https://blockworks-co.imgix.net/wp-content/uploads/2022/10/2022-10-13-Staudt025.png?w=33 33w" sizes="(max-width: 300px) 100vw, 300px" /><figcaption>Tom Staudt</figcaption></figure></div>


Blockworks: How has the firm’s attitudes toward crypto and blockchain changed, if at all, amid the crypto downturn?  



Staudt: Relative to the long-term value, we remain incredibly bullish that the opportunity continues to be very large and that it is in moments of general turmoil when adoption and innovation and technology such as the blockchain and crypto built on top of it tend to take disproportionate share gains.



We see, of course, the use cases coming out of a pandemic for digital assets, for digital money, for stores of value…have been highlighted in a very stark and a very abrupt way.&nbsp;



The full use cases aren’t present, the adoption rates aren’t there, the awareness is not high. And then suddenly the adoption curve slopes upward very quickly and people make the mistake of thinking that’s the moment the technology came or happened or occurred and ignore that the track’s been laid for so many years.



We think we’re at or very imminently near that inflection point…and we want to make sure investors get exposure before the catalyst to really participate in those greatest gains.



Blockworks: Despite its new focus on crypto SMAs, does Ark intend to continue trying to launch a spot bitcoin ETF?&nbsp;



Staudt: While that’s obviously been rejected multiple times, we continue to work with 21Shares and with regulators in the hope that they will make that product available. We think it’s a superior product to [bitcoin] futures [ETFs] for a number of reasons.



We see this working well in other jurisdictions and don’t think that the US should lag behind those other countries in terms of innovation due to regulatory arbitrage.



Blockworks: What other crypto-related offerings is Ark looking to bring to market?&nbsp;



Staudt: We’re looking to bring those same SMAs for advisors…to direct retail consumers as well for those who may not use intermediary channels. We’re still evaluating that, but certainly we have partnerships in the market…such as the Titan app.



We have also had a private accredited investor fund in the crypto space. We’re working to really increase the latitude allowed to it to invest in all corners of the cryptoasset space, including things like staking and more of the leading-edge parts.&nbsp;&nbsp;



We’re really trying to hit all of the channels…We think the investments we’re making right now are going to be critical to what is a key leg of the firm for years to come.



Blockworks: How do you see the crypto space being represented in <a href="https://ark-invest.com/strategy/ark-venture/" target="_blank" rel="noreferrer noopener">Ark’s new venture fund</a>? 



Staudt: Blockchain companies and cryptocurrency-related or adjacent [investments] are very much within the scope of the investment universe.



There has certainly been a shakeout in the space — and perhaps warranted — but I think long-term, any industry that has seen this type of shakeout tends to emerge on the other side stronger, more resilient and with better allocated capital.



We’re still amidst some of that shakeout — not just in the cryptoassets themselves but also in the companies that are participating in the space — so certainly some of those valuations have come down and are very attractive. Others are still fraught with risk profiles ahead.



We’re really not closing our minds to very much relative to the [crypto] ecosystem. I think there are parts that are naturally more value-add from a growth standpoint, and that will tend to be where we focus on more than the picks and shovels, such as mining.



Blockworks: The ARK venture fund currently holds Chipper Cash, a fintech that offers access to crypto. Why did that company stand out to the firm?&nbsp;



Staudt: We think the growth path in Africa and in some of the emerging markets for apps to really leapfrog what we know as traditional banking has huge potential.&nbsp;



What we’ve seen in some of those emerging markets, particularly on the African continent, is companies and apps that have been very single-country focused. [Chipper Cash] has been able to utilize the different financial services into the app, whether that be banking or crypto lending, and they’re doing it in a cross-border manner.



Blockworks: How might institutional investor attitudes toward crypto be evolving as they weigh the market conditions, a development like the Ethereum Merge, or the prevalence of crypto hacks?



Staudt: The geopolitical backdrop right now is very challenging. The macroeconomic backdrop is very challenging. I think in periods like this, there is a tendency, and in some cases understandably so, to really focus on what you’re comfortable with and what you know.



You add on top of that that ESG is certainly at the forefront…within much of the institutional space.



I think a lot of gains have been made. At times, it’s two steps forward and one step back, but I think there should be a lot of confidence built by the fact that as progress has been made, such as the Ethereum Merge, you’re eliminating some of those barriers to entry for very large, sophisticated players and there will be a tipping point to that, especially as the world settles down.



As [Ark Invest CEO] Cathie [Wood] would say, that can happen very, very quickly. When you reach a tipping point in adoption from a technology standpoint but also from an asset allocation standpoint, the impacts can be very swift.



This interview has been edited for clarity and brevity.



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Ark Invest COO: Wealth Managers Should Be ‘Massive Target’ for Crypto Space

<div id="highlights-block_633b023ca6933" class="highlights">
 <ul>
 <li>Move comes a few weeks after Franklin Templeton offered its first crypto-focused SMAs via Eaglebrook Advisors’ platform</li>
 <li>Eaglebrook CEO says firm has “a pipeline of large asset managers” looking to move into crypto space</li>
 </ul>
 
</div>



A fund group known for its investments in cutting-edge technology is set to bring its first crypto separately managed accounts (SMAs) just weeks after one of the world’s largest asset managers went that route.&nbsp;



Ark Invest has partnered with digital asset SMA platform Eaglebrook Advisors to offer the strategies to clients of registered investment advisers in what Eaglebrook CEO Christopher King told Blockworks is becoming a trend.&nbsp;



The asset manager’s Cryptocurrency Strategy primarily invests in bitcoin and ether. Ark’s Cryptoasset Strategy seeks to invest in the top 10 or 20 coins related to smart contract networks, DeFi and Web3, as well as infrastructure and scaling. The SMAs are set to launch on Oct. 17.



“We have a pipeline of large asset managers, but will stagger these launches to ensure success of each asset manager launch,” King said.



<blockquote class="wp-block-quote">“We are looking to work with any sophisticated asset manager looking to move into the crypto space and be the technology platform to launch their products,” he said.</blockquote>



The upcoming launch follows <a href="https://cms.blockworks.co/franklin-templeton-preps-first-institutional-crypto-accounts/" target="_blank" rel="noreferrer noopener">Franklin Templeton’s move to offer crypto-focused SMAs</a> for the first time. The fund giant, with roughly $1.4 trillion in assets under management, similarly teamed up with Eaglebrook to do so, and was also slated to make these offerings available to financial advisers and wealth managers by mid-October.



Roger Bayston, Franklin’s head of digital assets, told Blockworks at the time that customized SMAs are “a perfect delivery mechanism” for digital assets, adding that the wrapper is prevalent in traditional finance.&nbsp;



Ark Invest has eight ETFs trading in the US with combined assets under management of about $14 billion. The fund group is one of many fund managers <a href="https://cms.blockworks.co/ark-files-for-bitcoin-etf/" target="_blank" rel="noreferrer noopener">seeking to bring a spot bitcoin ETF</a> to market, though the SEC has not yet approved such an offering.&nbsp;



The company last week launched a venture fund for US investors that invests in public and private companies focused on robotics, energy storage, genomic sequencing, artificial intelligence and blockchain technology. One of <a href="https://ark-ventures.com/portfolio/" target="_blank" rel="noreferrer noopener">its holdings</a> is Chipper Cash, a private startup that offers a digital wallet with products such as cross-border payments, access to crypto and virtual cards.



Ark Invest crypto analyst Yassine Elmandjra said the firm believes its new crypto SMAs present an attractive entry point for investors.



“Crypto’s price action in the last year suggests that the ecosystem is fundamentally stronger than investors in traditional asset management are willing to acknowledge,” he said in a statement. “We’re thrilled to be offering actively managed crypto strategies to advisors during a time when, we believe, much of the speculative behavior has died down.”



An Ark Invest spokesperson did not immediately return a request for comment.



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Ark Invest Jumps Into Crypto SMA Arena

<div id="highlights-block_62f2cd8f335b5" class="highlights">
 <ul>
 <li>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</li>
 <li>Block’s Cash App tipped to enjoy long-term growth in part thanks to its bitcoin offerings</li>
 </ul>
 
</div>



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.&nbsp;



The innovation-focused fund manager doubled down on Ark’s bullish bitcoin projection after BlackRock, the world’s largest asset manager, revealed it would <a href="https://cms.blockworks.co/industry-watchers-execs-weigh-significance-of-blackrock-coinbase-deal/" target="_blank" rel="noreferrer noopener">offer institutional clients</a> access to bitcoin via Coinbase Prime.&nbsp;&nbsp;



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.&nbsp;



“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 <a href="https://cms.blockworks.co/ark-invest-sells-off-1-4-million-shares-of-coinbase-during-stock-plunge/" target="_blank" rel="noreferrer noopener">sold off roughly 1.4 million shares of Coinbase</a>, worth about $79 million at the time. The SEC had just <a href="https://cms.blockworks.co/qa-the-sec-classified-9-tokens-as-securities-now-what/" target="_blank" rel="noreferrer noopener">classified nine Coinbase-listed tokens as securities</a> in a complaint alleging that a former Coinbase product manager and people close to him used classified information for <a href="https://cms.blockworks.co/sec-charges-former-coinbase-product-manager-with-insider-trading/" target="_blank" rel="noreferrer noopener">insider trading</a>.&nbsp;



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.&nbsp;



<h3>Block’s Cash App ‘key part of bitcoin ecosystem’</h3>



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 <a href="https://s29.q4cdn.com/628966176/files/doc_financials/2022/q2/Block_2Q22-Shareholder-Letter.pdf" target="_blank" rel="noreferrer noopener">posted net revenue of $4.4 billion in the second quarter</a>, 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.”&nbsp;&nbsp;



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, <a href="https://ark-funds.com/funds/arkk/" target="_blank" rel="noreferrer noopener">ARKK</a>, currently weights Coinbase and Block at 4.65% and 4.9% of its $7.9 billion portfolio, respectively.



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Ark Invest Analysts Share Bullish Outlook for Coinbase, Block

<div id="highlights-block_62e14e3dea814" class="highlights">
 <ul>
 <li>The Ark Innovation ETF (ARKK) still reported holding nearly 5 million shares of Coinbase on Wednesday</li>
 <li>Coinbase stock is down roughly 20% over the past five days, as of 10 am ET Wednesday</li>
 </ul>
 
</div>



Ark Invest has sold off roughly 1.4 million shares of <a href="https://cms.blockworks.co/tag/coinbase/" target="_blank" rel="noreferrer noopener">Coinbase</a> as the crypto exchange faces regulatory uncertainty within a bear market.&nbsp;



The innovation-focused asset manager run by <a href="https://cms.blockworks.co/tag/cathie-wood/" target="_blank" rel="noreferrer noopener">Cathie Wood</a> sold more than 1.1 million shares of Coinbase from its Ark Innovation ETF (ARKK), the company reported in an email. <a href="https://cms.blockworks.co/tag/ark-invest/" target="_blank" rel="noreferrer noopener">Ark</a> also sold off about 175,000 shares of the stock from the Ark Next Generation Internet ETF (ARKW) and 110,000 shares from the Ark Fintech Innovation ETF (ARKF).&nbsp;



Coinbase stock traded for $56.70 at 10:20 am ET, valuing Ark’s offloaded shares at more than $79 million.



ARKK, the company’s largest ETF with about $8 billion in assets under management, <a href="https://ark-funds.com/wp-content/uploads/funds-etf-pdf/ARK_INNOVATION_ETF_ARKK_HOLDINGS.pdf" target="_blank" rel="noreferrer noopener">currently owns</a> about 5 million shares of Coinbase, worth $283.5 million at press time. The shares account for nearly 3% of the portfolio.



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<iframe class="wp-embedded-content" sandbox="allow-scripts" security="restricted" src="https://flo.uri.sh/visualisation/10755359/embed#?secret=8B4xnmVNZF" data-secret="8B4xnmVNZF" frameborder="0" scrolling="no" height="575" width="700"></iframe>
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The sales come after the US Securities and Exchange Commission <a href="https://cms.blockworks.co/qa-the-sec-classified-9-tokens-as-securities-now-what/" target="_blank" rel="noreferrer noopener">classified nine Coinbase-listed tokens as securities</a> in a complaint alleging that a former Coinbase product manager and people close to him used classified information for <a href="https://cms.blockworks.co/sec-charges-former-coinbase-product-manager-with-insider-trading/" target="_blank" rel="noreferrer noopener">insider trading</a>.&nbsp;



Though Coinbase’s price was up about 7% on Wednesday morning, according to Google Finance data, the stock is down about 20% from five days ago.



<h3>Ark has frequently pushed Coinbase bull case</h3>



Ark’s Wood is bullish on crypto. In November 2020, she shared belief that <a href="https://www.barrons.com/articles/bitcoin-could-hit-500-000-according-to-ark-invests-catherine-wood-51605906264" target="_blank" rel="noreferrer noopener">bitcoin could hit $500,000</a> in the long term.&nbsp;



The executive noted during Miami’s <a href="https://cms.blockworks.co/crypto-and-tradfi-collide-at-miami-etf-conference/" target="_blank" rel="noreferrer noopener">Exchange ETF conference</a> in April that Coinbase’s decline throughout the year, while crypto companies have raised cash at valuations in the billions, “makes no sense.”&nbsp;



Ark Invest <a href="https://cms.blockworks.co/ark-invest-buys-grayscale-coinbase-during-bitcoin-price-drop/" target="_blank" rel="noreferrer noopener">bought 215,000 shares of Coinbase</a> on a single day last year as bitcoin fell below $30,000 for the first time in months. Coinbase’s share price hovered around $220 at the time. The firm also <a href="https://fortune.com/2022/05/12/cathie-wood-ark-invest-buys-coinbase-shares-after-crash/" target="_blank" rel="noreferrer noopener">bought</a> 550,000 shares back in May, when they were worth $50.



Ark analyst Maximilian Friedrich said during a webinar in January that Coinbase is <a href="https://cms.blockworks.co/ark-invest-coinbase-is-an-attractive-long-term-play/" target="_blank" rel="noreferrer noopener">an attractive long-term play</a>, noting the company accounted for roughly 10% of spot trading volume in the crypto market in 2021.&nbsp;



Ark Research Associate <a href="https://www.linkedin.com/in/nishitavjain/" target="_blank" rel="noreferrer noopener">Nishita Jain</a> also pointed to Coinbase’s expanding product set and desire to diversify its revenue stream as reasons to be bullish on the company.



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Ark Invest Sells Off 1.4 Million Shares of Coinbase During Stock Plunge

Jacquelyn Melinek

<div id="highlights-block_61fd75403556f" class="highlights">
 <ul>
 <li>On Friday, layer-2 infrastructure firm Qredo closed its $80 million Series A round led by 10T Holdings</li>
 <li>Earlier this week, Seven Seven Six closed a whopping $500 million venture fund for its second fund, which will focus primarily on crypto startups</li>
 </ul>
 
</div>



Capital continued to pour into crypto this week, despite a recent downturn in digital asset markets.



“Significant capital raises that closed last year will be deployed now, I expect an increased pace of activity,” Stan Miroshnik, co-founder of 10T Holdings, <a href="https://cms.blockworks.co/crypto-vc-market-poised-for-growth/" target="_blank" rel="noreferrer noopener">told</a> Blockworks earlier this week.



Layer-2 infrastructure firm Qredo closed its $80 million Series A round Friday, led by 10T Holdings, with participation from Coinbase, Avalanche and Terra. The raise brings its valuation to $640 million, after raising $120 million across the past 12 months.



“Infrastructure is a key battleground for scaling crypto adoption,” <a href="https://cms.blockworks.co/podcast-is-the-crypto-bull-market-over-dan-tapiero-and-dan-morehead/" target="_blank" rel="noreferrer noopener">Dan Tapiero</a>, founder and CEO of 10T Holdings, said.



More than $800 million was raised this week, according to PitchBook data. Some of the larger rounds include <a href="https://cms.blockworks.co/ftx-valued-at-32-billion/" target="_blank" rel="noreferrer noopener">FTX’s $400 million</a>, <a href="https://cms.blockworks.co/crypto-wallet-raises-109-million/" target="_blank" rel="noreferrer noopener">Phantom’s $109 million</a> and <a href="https://cms.blockworks.co/web3-data-firm-dune-analytics-hits-unicorn-status/" target="_blank" rel="noreferrer noopener">Dune Analytics’ $69.42 million</a> capital raises.



Other fundraisers include:



<ul><li>Pixel Vault’s $100 million, which will be used to help launch an NFT platform</li><li>Tribal Credit, which offers crypto financial services, raised $60 million in a round led by SoftBank to expand into Latin America</li><li>CoinFund co-led $5.7 million seed round in prime brokerage liquidity protocol Primex Finance</li><li>Celebrity-focused NFT platform Colexion’s $5 million raise to expand into the metaverse</li><li>DAO-to-DAO credit lending platform Kyoko Finance closed $3 million private round led by Animoca Brands</li></ul>



Meanwhile, Reddit Co-founder Alexis Ohanian’s venture capital firm, Seven Seven Six (776), closed a whopping $500 million venture fund. The raise was oversubscribed, with $300 million going toward funding early-stage startups and $200 million going toward companies in growth stages.



The firm plans to primarily invest in crypto startups by the end of the year, Ohanian <a href="https://www.wsj.com/articles/alexis-ohanians-venture-capital-firm-raises-500-million-doubles-down-on-crypto-startups-11643716803" target="_blank" rel="noreferrer noopener">told</a> the Wall Street Journal. The VC has over $750 million assets under management, just $26 million short of matching their name, 776, Ohanian <a href="https://twitter.com/alexisohanian/status/1488496693549142019?s=20&amp;t=Vp_Sq3zKGfyP5m6tHu0NWg" target="_blank" rel="noreferrer noopener">quipped</a> on Twitter.



Ark Invest filed to launch a venture fund that would invest in companies involved in disruptive innovation, including those related to crypto and blockchain technology, <a href="https://cms.blockworks.co/ark-invest-seeks-to-launch-venture-fund/">Blockworks reported</a>.&nbsp;



Separately, Arca also launched its NFT fund this week, which oversubscribed its initial cap of <a href="https://www.globenewswire.com/news-release/2022/02/03/2378523/0/en/Arca-s-Oversubscribed-NFT-Fund-Closes-At-50M-Cap.html" target="_blank" rel="noreferrer noopener">$50 million</a>. The fund joins the firm’s three other investment products, including its Digital Assets Fund and Digital Yield Fund. The fund will invest in NFTs, as well as digital property, in-game assets, DeFi-integrated NFTs and utility- and reward-based NFTs.



“We believe that, at present, there is a dislocation between the value of non fungible assets and the value of the underpinning ecosystem via equity, tokens, etc,” Arca Portfolio Manager Sasha Fleyshman told Blockworks in a statement. “We look to both capitalize on that mismatch and catalyze the perception change of investing directly into NFTs as investment grade assets.”



Check back next week for even more funding news.



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Fundraising Wrap: Over $800M in Investments Poured into Crypto This Week

<div id="highlights-block_61fd5247c8880" class="highlights">
 <ul>
 <li>The Ark Venture Fund may invest in companies that “develop, use or rely on” blockchain technologies, as well as the Grayscale Bitcoin Trust (GBTC)</li>
 <li>Proposed interval fund would conduct quarterly repurchase offers of the fund’s shares</li>
 </ul>
 
</div>





Ark Invest has filed to launch a venture fund that would invest in companies involved in disruptive innovation, including those related to crypto and blockchain technologies.



The New York-based investment firm has nine exchange-traded funds trading in the US with combined assets of roughly $22 billion.



But the new fund will be structured as an interval fund, meaning it would conduct quarterly repurchase offers for an expected 5% of the fund’s shares, according to <a href="https://www.sec.gov/Archives/edgar/data/1905088/000110465922011382/tm225314d1_n2.htm" target="_blank" rel="noreferrer noopener">a disclosure</a> filed Thursday.



It would invest in public, as well as privately placed or restricted, securities. The fund has a minimum initial investment of $1,000.



Such companies the Ark Venture Fund seeks to invest in include those involved in revolutionizing genomics and transforming automation and energy usage, as well as businesses focused on artificial intelligence, financial technology and the next generation of the internet.



This comprises companies that “develop, use or rely on” blockchain technologies, the filing notes. The fund may also have exposure to cryptocurrencies, such as bitcoin, indirectly through an investment in the Grayscale Bitcoin Trust (GBTC).



An Ark spokesperson declined to comment further on the proposed fund.



Bloomberg Intelligence Analyst James Seyffart <a href="https://twitter.com/JSeyff/status/1489381051780767744" target="_blank" rel="noreferrer noopener">said in a Twitter post</a> that the interval fund structure makes sense for Ark’s investment strategy.



“Can buy semi-private investments, control inflows &amp; outflows, close the fund,” he wrote in the tweet. “All of this will allow Ark to dig deeper into smaller names and worry a bit less about liquidity risk.”



Ark Invest and 21Shares in June <a href="https://cms.blockworks.co/ark-files-for-bitcoin-etf/">filed for a physically backed bitcoin ETF</a>, a type of product that the US Securities and Exchange Commission (SEC) has not yet approved. More recently, the firm teamed up with 21Shares in an effort to bring <a href="https://cms.blockworks.co/ark-invest-21shares-team-with-white-label-alpha-architect-to-propose-futures-based-bitcoin-etf/">a bitcoin futures-based ETF</a> to market.



Ark founder and CEO Cathie Wood said in November 2020 at a virtual Barron’s conference that she believes <a href="https://www.barrons.com/articles/bitcoin-could-hit-500-000-according-to-ark-invests-catherine-wood-51605906264" target="_blank" rel="noreferrer noopener">bitcoin could hit $500,000</a> in the long-term. She shared bullish comments about crypto technologies more broadly during a Jan. 25 webinar.



“We do think that decentralized finance will usurp the role of most financial services companies today,” she noted as part of the discussion with MSNBC’s Chris Hayes.



Ark’s <a href="https://research.ark-invest.com/hubfs/1_Download_Files_ARK-Invest/White_Papers/ARK_BigIdeas2022.pdf">“Big Ideas”</a> report published last month predicts that ether’s market capitalization — currently at roughly $345 billion — could exceed $20 trillion in the next 10 years.



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Ark Invest Seeks to Launch Venture Fund

<div id="highlights-block_61df0e8ba6e51" class="highlights">
 <ul>
 <li>Coinbase’s planned product expansion will increase number and stickiness of its users over the long-term, Ark professionals say</li>
 <li>Ark Invest bought about 200,000 shares of Coinbase across three of its ETFs on Monday and Tuesday</li>
 </ul>
 
</div>



Coinbase’s position as a leading on-ramp to crypto and its plans to add products make it an attractive long-term play, according to an analyst and research associate at investment management firm Ark Invest.



The crypto exchange is a market leader due to its emphasis on product excellence and regulatory compliance, Ark analyst Maximilian Friedrich said during a webinar on Tuesday.&nbsp;



Coinbase accounted for roughly 10% of spot trading volume in the crypto market in 2021, he added.



“In the long-term, we think that Coinbase will continue to capture trading volume market share, which we estimate is going to grow at a significant rate, and really innovate on the product side, which we think is going to increase the number and the stickiness of the users on the platform,” he explained.&nbsp;



<h3>Buying more Coinbase</h3>



Ark Invest reported buying 86,295 shares of Coinbase for its Innovation ETF (ARKK) on Monday. That same day, it added 57,223 shares to its Fintech Innovation ETF (ARKF).



Coinbase was the fifth-largest holding in ARKK, as of Tuesday, with a weighting of about 5.3%. Coinbase’s nearly 9.1% weighting in ARKF makes it the portfolio’s second-largest holding.&nbsp;



The firm also added 54,114 shares of Coinbase to the Ark Next Generation Internet ETF (ARKW) on Tuesday. The crypto exchange has a 6.8% weighting in that fund, behind only Tesla and ahead of the Grayscale Bitcoin Trust (GBTC).



<h3>Coinbase’s product expansion potential</h3>



Though a good portion of Coinbase’s revenues come from trading, Ark Research Associate Nishita Jain said during the webinar, the firm expects its revenue stream to diversify as it expands its product set.&nbsp;



Bank of America Research Analyst Jason Kupferberg <a href="https://cms.blockworks.co/bank-of-america-coinbase-revenue-diversification-to-accelerate-in-2022-and-beyond/" target="_blank" rel="noreferrer noopener">said recently</a> that Coinbase’s revenue diversification is likely to accelerate in 2022 and beyond. He upgraded Coinbase to a buy rating at the time and predicted that the crypto platform’s subscription and services revenue, which was 12% of its total net revenue in the third quarter of 2021, will rise to 16% by next year.



Friedrich and Jain said that the upcoming launch of Coinbase’s NFT marketplace is a significant opportunity for the company, highlighting OpenSea. As the largest NFT marketplace, OpenSea secured <a href="https://cms.blockworks.co/opensea-polygon-nft-sales-on-track-to-hit-2-2m-by-end-of-january/" target="_blank" rel="noreferrer noopener">$300 million in Series C funding</a> earlier this month, bringing its post-money valuation to $13.3 billion.&nbsp;



Coinbase also announced a <a href="https://cms.blockworks.co/coinbases-new-direct-deposit-feature-allows-users-to-get-paychecks-in-crypto/" target="_blank" rel="noreferrer noopener">direct deposit feature</a> last year, and the company <a href="https://blog.coinbase.com/coinbase-wallet-is-now-available-as-a-standalone-browser-extension-c65bb5c87b83" target="_blank" rel="noreferrer noopener">announced in November</a> that it made Coinbase Wallet available as a standalone browser extension.&nbsp;



“We really see Coinbase as a play to the broader crypto ecosystem and really connecting users through both the on-ramp and allowing them to choose the ways they want to interact with the crypto ecosystem,” Jain said.



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<hr class="wp-block-separator">

Ark Invest: Coinbase is an Attractive Long-term Play

<div id="highlights-block_61675cdc0a320" class="highlights">
 <ul>
 <li>The 75-day period for the SEC to rule on the ProShares’ proposed futures-based ETF, which was the first such product registered for, ends on Monday</li>
 <li>Ark and 21Shares had teamed up to file for a physically backed bitcoin ETF in June </li>
 </ul>
 
</div>



As the SEC gets set to rule on the first proposed futures-based bitcoin ETFs next week, Ark Invest and 21Shares have added a proposed offering to the mix under a white label provider.&nbsp;



The ARK 21Shares Bitcoin Futures Strategy ETF (ARKA) is an actively managed fund that invests in cash-settled exchange-traded bitcoin futures contracts traded on, or subject to the rules of, commodity exchanges registered with the Commodity Futures Trading Commission (CFTC), according to a <a href="https://www.sec.gov/Archives/edgar/data/1592900/000182912621011950/alphaarchitect_485apos.htm" target="_blank" rel="noreferrer noopener">regulatory disclosure</a> filed on Wednesday.



The investment adviser is white label provider Alpha Architect, and 21Shares will serve as the fund’s subadviser. Ark Invest has agreed to provide marketing support to 21Shares but will not make investment decisions or provide investment advice, the filing states.



In addition to bitcoin futures contracts, the planned offering may also invest in US Treasuries, money market funds, cash and other instruments to provide liquidity, serve as margin or collateralize the fund’s investments in bitcoin futures, the document notes.



The fund does not invest directly in bitcoin or other digital assets.



SEC Chairman Gary Gensler said during <a href="https://cms.blockworks.co/sec-chair-gensler-prioritizes-crypto-platform-crackdown/" target="_blank" rel="noreferrer noopener">a virtual forum</a> in August that his agency would “look forward” to reviewing ETFs that were limited to investing in bitcoin futures contracts.



<h3>SEC approval could be imminent</h3>



Some industry watchers expect the SEC to approve one or several futures-based bitcoin ETFs next week. The 75-day period for the agency to rule on <a href="https://cms.blockworks.co/invesco-proshares-plan-to-launch-bitcoin-futures-based-etfs/" target="_blank" rel="noreferrer noopener">ProShares’ proposed bitcoin strategy ETF</a> ends on Monday, and <a href="https://cms.blockworks.co/who-will-win-the-bitcoin-futures-etf-race/" target="_blank" rel="noreferrer noopener">similar funds</a> by Valkyrie, Invesco and VanEck — filed for in the days following ProShares’ proposal — may gain approval or be rejected at the same time or in the days thereafter. 



Valkyrie updated its bitcoin futures ETF <a href="https://www.sec.gov/Archives/edgar/data/1877493/000138713121009989/valk-n1aa_092321.htm" target="_blank" rel="noreferrer noopener">prospectus</a> on Wednesday, adding ticker BTF to the proposed product. 



<blockquote class="wp-block-quote">“People keep asking me what I&#8217;m looking for first to confirm SEC approval and it is these [types] of updated prospectus filings,” Bloomberg Intelligence ETF Analyst Eric Balchunas wrote in a Twitter post about the Valkyrie disclosure. “That&#8217;s what happens right [before] a launch — they fill in all the XXs and add ticker.”</blockquote>



Balchunas then tweeted about the new filing from Ark and 21Shares — also with a ticker listed — which he said is “yet another good sign SEC gonna approve.”



The futures-based bitcoin ETF filing comes after Ark and 21Shares <a href="https://cms.blockworks.co/ark-files-for-bitcoin-etf/" target="_blank" rel="noreferrer noopener">filed for a physically backed bitcoin ETF</a> in June. 



As a dozen or so spot bitcoin ETFs sit in registration, industry watchers have pointed out attributes of futures-based ETFs that may make them <a href="https://cms.blockworks.co/a-futures-based-bitcoin-etf-could-be-suboptimal-heres-why/" target="_blank" rel="noreferrer noopener">less attractive to investors</a>, such as roll costs and contango. 



Executives at Grayscale Investments, which is looking to convert its Grayscale Bitcoin Trust (GBTC) into an ETF, have <a href="https://cms.blockworks.co/grayscale-urging-sec-to-approve-bitcoin-spot-futures-etfs-at-same-time/" target="_blank" rel="noreferrer noopener">urged the SEC</a> to approve physically backed bitcoin ETFs at the same time to ensure “a level playing field.”

Ark Invest, 21Shares Team with White-label Alpha Architect to Propose Futures-based Bitcoin ETF

<div id="highlights-block_61549828ba1ea" class="highlights">
 <ul>
 <li>Coinbase is the fourth-largest holding in the Ark Innovation ETF (ARKK), behind only Tesla, Teledoc Health and Roku</li>
 <li>Ark had bought more than 1 million shares of Grayscale’s Bitcoin Trust and about 215,000 shares of Coinbase on a single day in June amid bitcoin price drop</li>
 </ul>
 
</div>



Ark Invest has bought more Coinbase for its largest ETF focused on cutting-edge firms as the fund group remains bullish on crypto.



The investment manager bought 184,199 shares of Coinbase, worth about $42 million, for the Ark Innovation ETF (ARKK), according to a firm disclosure on Tuesday. ARKK, which has about $21 billion assets under management, holds a 5% allocation in the crypto exchange, <a href="https://ark-funds.com/wp-content/fundsiteliterature/holdings/ARK_INNOVATION_ETF_ARKK_HOLDINGS.pdf">according to Ark’s website</a>, making it the fourth-largest holding in the portfolio.



ARKK added roughly 105,000 Coinbase shares across a two-day span last week, separate disclosures show.



An Ark spokesperson did not immediately respond to Blockworks’ request for comment.



The share purchases come after SkyBridge Capital Founder Anthony Scaramucci told Bloomberg that he predicts a large bank to one day buy a crypto company like Coinbase. The exchange, which <a href="https://cms.blockworks.co/coinbase-direct-listing-shares-are-limited-demand-is-high/">went public in April</a>, reported about $2.2 billion of revenue in this year’s second quarter.&nbsp;



Coinbase last week<a href="https://cms.blockworks.co/coinbase-cancels-plans-to-launch-lending-program/"> put off its plans</a> to launch a lending product after the company claimed it was threatened by the SEC. But executives said the exchange is working on a regulatory proposal to submit to US lawmakers, citing a need for clarity and fairness in the space.&nbsp;&nbsp;&nbsp;



The company <a href="https://cms.blockworks.co/coinbases-new-direct-deposit-feature-allows-users-to-get-paychecks-in-crypto/">announced on Monday</a> that users will soon be able to directly deposit any percentage of their paycheck into their accounts on its platform. It also revealed that its Coinbase Card would become available to all US-based customers this Fall.



Ark Invest also bought about 164,000 shares — worth nearly $40 million — of Square, the Tuesday disclosure indicated. Square, a digital payments service company led by Twitter CEO Jack Dorsey, represents about 4% of ARKK’s holdings.&nbsp;



Dorsey <a href="https://cms.blockworks.co/jack-dorsey-confirms-square-will-make-bitcoin-hardware-wallet/">announced in July</a> that Square would build a hardware wallet and service to make bitcoin custody more mainstream. In a second quarter shareholder letter, <a href="https://cms.blockworks.co/square-reports-bitcoin-related-revenue-up-200-buys-afterpay/">the company reported</a> that its revenue from bitcoin-related services was up 200% on-year.



Ark chief investment officer Cathie Wood said at the SALT conference in New York City earlier this month that bitcoin’s price <a href="https://cms.blockworks.co/ark-invest-cathie-wood-is-bullish-on-eth-as-proof-of-stake-transition-nears/">could go above $500,000</a> if companies continue to diversify their cash into bitcoin and institutional investors start allocating 5% of their funds to the cryptocurrency.



The fund group <a href="https://cms.blockworks.co/ark-invest-buys-grayscale-coinbase-during-bitcoin-price-drop/">had bought</a> more than 1 million shares of Grayscale’s Bitcoin Trust and about 215,000 shares of Coinbase on a single day in June as <a href="https://cms.blockworks.co/bitcoin-rallies-after-tumbling-below-30000-stocks-climb-after-fed-hearing-markets-wrap/">bitcoin fell below $30,000</a>.