Ark Invest Trims Coinbase Stake as Hawkish Fed Outlook Sends Crypto Markets Lower
Ark Invest, the firm led by Cathie Wood, sold 13,780 shares of Coinbase on Wednesday, a move valued at approximately $3.9 million. The sale took place as Coinbase’s stock price declined around 10% following remarks from the Federal Reserve that signaled a more hawkish approach to future monetary policy.
This transaction marks one of Ark’s most significant recent reductions of its Coinbase position since it sold $2.8 million worth of the exchange’s shares on September 23. Ark’s investment strategy generally discourages any single holding from accounting for more than 10% of an exchange-traded fund’s (ETF) portfolio, prompting periodic adjustments to maintain balance. As Coinbase’s share price fluctuates, Ark appears to be proactively rebalancing its holdings.
As of December 18, Coinbase ranked as the second-largest holding in Ark’s Fintech Innovation ETF (ARKF), representing 9.9% of the fund’s total weighting—just behind its top holding, Spotify. At current valuations, ARKF’s Coinbase stake is worth about $110 million. Overall, ARKF has risen around 54% since the start of the year.
On Wednesday, Coinbase shares closed at $279.86, down 10.2% for the day. Still, pre-market trading on Thursday showed a 3.5% rebound, and the stock remains up more than 61% year-to-date, according to TradingView. The company’s market capitalization currently stands at about $52.1 billion.
Market Reaction to Fed’s Hawkish Tone
“The Federal Reserve delivered a widely expected 25-basis-point rate cut yesterday,” said BRN analyst Valentin Fournier in an email to The Block. “However, Chair Jerome Powell’s follow-up commentary introduced a notably hawkish tone. Instead of projecting four rate reductions in 2025, the Fed now anticipates only two, which took markets by surprise despite ongoing signs of stubborn inflation.”
The crypto market, which initially gained ground after the Fed’s rate cut, quickly reversed course once Powell’s comments sank in. Bitcoin’s price fell roughly 9% from above $108,000 to dip below $100,000 at one point before recovering. At the time of writing, the leading cryptocurrency is trading around $102,419, based on The Block’s Bitcoin Price Page.
Investors also appeared to respond to Powell’s reiteration that the Federal Reserve cannot hold bitcoin without Congressional approval. Some saw this stance as a hurdle to President-elect Donald Trump’s previously discussed plan for a strategic national bitcoin reserve. However, that proposal—along with Senator Cynthia Lummis of Wyoming’s related draft bill—focuses on the U.S. Treasury acquiring one million bitcoins over five years, rather than the Fed directly purchasing the asset.
Despite the day’s volatility, inflows into U.S. spot Bitcoin ETFs remained robust, adding $275.3 million on Wednesday and extending a 15-day streak of positive contributions. Total inflows have now surpassed $6.7 billion. U.S. spot Ethereum ETFs also saw steady investment, bringing in $2.5 million on Wednesday to maintain an 18-day positive run that has reached nearly $2.5 billion in total inflows.
Meanwhile, the GMCI 30 index—which tracks a basket of 30 leading cryptocurrencies—tumbled over 15% following the Fed’s press conference, sliding to 188.07 before recovering to 200.30 at the time of publication.
“Looking ahead, we can expect ongoing volatility as markets adjust to elevated expectations for Donald Trump’s presidency,” Fournier added. “While the near-term may feel choppy, the overall long-term outlook for both digital assets and equities remains optimistic.”