Cathie Wood’s ARK sells 135k Coinbase shares as COIN hits $90

July 12, 2023 Coin Telegraph

Cathie Wood is taking profits from ARK Invest's Coinbase holdings by selling a small portion of its COIN stash.

Pro-Bitcoin (BTC) Investment veteran Cathie Wood is taking some profits from ARK Invest's large Coinbase (COIN) holdings by selling a small portion of its COIN stash.

On July 11, Wood’s investment firm ARK offloaded 135,152 Coinbase shares ($12 million) from one of its major exchange-traded funds, the ARK Innovation ETF (ARKK). According to the trade notification seen by Cointelegraph, the amount that was sold made up 0.14% of the total holdings of the fund.

The sale comes as the Coinbase stock price has been seeing a sharp increase. On July 11, COIN briefly surpassed $90, surging from around $82 to as high as $90.9, according to data from TradingView. Following Wood’s sale, the stock closed at $89 on Tuesday.

According to TradingView data, Coinbase stock is up more than 60% over the past month, while the year-to-date increase is more than 140%.

*Coinbase (COIN) 7-day price chart. Source: TradingView*

The new COIN sale by ARK is the second time Wood has taken profits from Coinbase shares this year. On March 21, ARK sold 160,887 Coinbase shares from its ARK Fintech Innovation ETF (ARKF) for $13.5 million, or at roughly $84 per share.

Before taking the fresh profits from ARK’s COIN holdings, Wood has been actively accumulating Coinbase stock in multiple ARK’s funds. In June alone, ARK purchased about $40 million in Coinbase shares. Previously, the investment firm bought around $33 million in Coinbase shares in May and April, as well as $117 million worth of Coinbase shares in March.

Multiple Coinbase executives, including CEO Brian Armstrong, have been selling their shares as Coinbase shares rallied over the past months. On July 6, Armstrong and several other senior Coinbase execs sold a combined total of 88,058 shares worth about $6.9 million at the time. Previously, Coinbase chief accounting officer Jennifer Jones also offloaded 74,375 Coinbase shares on June 29, netting $5.2 million.

The rise of Coinbase stock comes despite the exchange facing a securities violation lawsuit from the United States Securities and Exchange Commission. The growth is apparently largely attributed to the fear of missing out (FOMO) around the BlackRock Bitcoin ETF, which named Coinbase as “surveillance-sharing” partner.

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Crypto ATM firm Bitcoin Depot will go public on Nasdaq starting July 3

June 30, 2023 Coin Telegraph

ATM

The special purpose acquisition company deal, first reported in August 2022, cost $885 million and is expected to allow investors exposure to Bitcoin Depot’s common stock.

Bitcoin Depot, one of the largest cryptocurrency ATM firms in the United States, has announced the closing of a merger deal allowing the company to go public.

In a June 30 announcement, fintech firm GSR II Meteora Acquisition Corporation said its stockholders had approved the merger for the firm to act as a special purpose acquisition company for Bitcoin Depot. The deal, first reported in August 2022, cost $885 million and is expected to allow investors exposure to Bitcoin Depot on the Nasdaq starting July 3.

$GSRM & Bitcoin Depot deal closing PR. Will trade as $BTM on Monday, July 3.https://t.co/tlimnZdQqF
— SPAC Track (@SPACtrack) June 30, 2023

According to Bitcoin Depot founder and CEO Brandon Mintz, the merger deal was aimed at supporting “numerous growth opportunities” and promoting the adoption of Bitcoin (BTC) in North America. Investors will be able to find shares of Bitcoin Depot under the ticker symbols BTM and BTMWW for its common stock and public warrants, respectively.

The announcement came amid regulatory scrutiny of firms in the U.S. offering crypto products or services. The Securities and Exchange Commission filed lawsuits against exchanges Binance and Coinbase for alleged unregistered securities offerings. However, investment vehicles with exposure to crypto also seem to be on the rise following BlackRock filing an application in June to list a spot Bitcoin exchange-traded fund.

Founded in 2016, Bitcoin Depot is one of the biggest crypto ATM firms in North America, with more than 9,130 locations, according to its website. In May, fellow ATM provider Bitcoin of America announced it would shutter operations in Connecticut following the state’s Department of Banking saying the firm didn’t have the proper licensing.

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Warren Buffett dumps $13.3B in stocks — A warning sign for Bitcoin and risk-assets?

May 9, 2023 Coin Telegraph

Warren Buffett dumps .3B in stocks — A warning sign for Bitcoin and risk-assets?

Banking Crisis

The "Oracle of Omaha" has increased Berkshire Hathaway's cash holdings by $2 billion in Q1, signaling his decreasing confidence in risk-assets.

Warren Buffett moving into cash suggests that he's bracing for a possible collapse in risk-on asset prices. With Bitcoin (BTC) up 70% year-to-date and correlated with equities, should BTC investors also prepare for a potential stock market crash?

Buffett says "incredible period" is over

Warren Buffett's Berkshire Hathaway dumped $13.30 billion worth of equities and increased exposure in cash and U.S. Treasuries in Q1, its latest quarterly earnings report shows. Meanwhile, it channeled $4.4 billion toward purchasing its own stock and $2.9 billion on the shares of other publicly-traded companies.

The market considers Berkshire Hathaway's performance as a key indicator to gauge the U.S. economy's health, given the firm's holdings range from American railroad to electric utilities and retail businesses.

But the 92-year old investor, who has credited the U.S. economy's growth for the success of Berkshire Hathaway in the past, is no longer optimistic.

“The majority of our businesses will report lower earnings this year than last year,” Buffett said last weekend at an event. The “incredible period” for the US economy has been coming to an end over the past six months, he added.

Berkshire raised its cash reserves by $2 billion to $130.60 billion in Q1/2023, the highest level since the end of 2021 when equities entered a bear cycle. Moreover, the firm holds a vast amount of its cash in short-term Treasury bills and bank deposits thanks to higher interest rates near 5%.

In other words, Buffett is preparing for a potential stock market crash, particularly as the U.S. banking crisis continues to unfold (e.g. PacWest Bancorp and Western Alliance Bancorp) .

Bitcoin price stays correlated with Nasdaq

The increasing possibility of a global recession also risks putting downside pressure on Bitcoin, whose 100-week correlation with the Nasdaq reached its highest level of about 0.42%.

Moreover, Bloomberg Intelligence analyst Mike McGlone expects that BTC price would likely be the leading indicator for a stock crash.

"Bitcoin could pace declines for risk assets — If the worst isn't over for risk assets, Bitcoin may lead the way lower," noted McGlone, adding:

"Bitcoin is up about 70% in 2023 to May 2 vs. 20% for the stock index, and those are maybe bounces within broader bear markets. The Fed [is] still tightening in May, and [is] more inclined to stay the course unless risk assets fall to ease inflation, may portend a lose-lose."

In the short term, there are little expectations from the U.S. consumer price index report on May 10 about easing inflation in April. According to Bloomberg’s survey, economists expect core CPI to remain unchanged at around 5%, meaning more rate hikes ahead.

On the other hand, a big drop in inflation will likely prompt the Fed to consider pausing or even slashing interest rates in an extreme case scenario.

Currently, Fed funds futures' data suggests that at least five rate cuts between May 2023 and January 2024 are likely — something which may pour cold water on Buffett's risk-off strategy.

*Fed funds rate projections. Source: Bloomberg*

Could Bitcoin price fall below $25K again?

Bitcoin's price has declined roughly 6% over the past week, trading for as low as $27,350 on May 9.

Notably, this has pulled BTC's price the below its 50-day exponential moving average (50-day EMA; the red wave) near $27,950.

Bitcoin bears are now eyeing $27,000 as the next downside target based on the level's recent history.

*BTC/USD daily price chart. Source: TradingView*

A decisive break below the $27,000 support, primarily in the event of further rate hikes, could then pull down BTC/USD down to its 200-day EMA (the blue wave) near $24,600. In other words, a 10% drop by June.

Conversely, a rebound from $27,000 increases the possibility of BTC price retesting $30,000 as resistance, and to resume the uptrend of the last few months.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Coinbase officers, board members face suit over alleged insider trading during listing

May 2, 2023 Coin Telegraph

Coin Telegraph

The suit charges the alleged inside traders saved over $1 billion by selling their shares when the company went public, despite knowing they would lose value.

A Coinbase shareholder has filed a stockholder derivative complaint against some of the company’s executives and board members, claiming they profited from inside information during the company’s public listing. CEO Brian Armstrong and well-known venture capitalists are among the defendants.

A stockholder derivative complaint is a suit filed against a company on behalf of its stockholders. Coinbase shareholder Adam Grabski filed the suit in the Delaware Court of Chancery on May 1. Grabski bought Coinbase shares on the first day of the crypto exchange's public listing.

According to a redacted version of the complaint posted by the court, the defendants were able to sell $2.9 billion worth of Coinbase shares made available to the public through a direct listing of the company’s stock on the Nasdaq exchange on April 14, 2021, and in the week that followed.

Fascinating lawsuit discusses Coinbase board’s confidential plan to go public two years ago> The process was given the internal nickname “Project Fall Fruits”.

The project was indeed, er, fruitful. Look who got rich:$COIN pic.twitter.com/FUGT2g5ZEx
— Jim Edwards (@Jim_Edwards) May 2, 2023

If the company had made an initial public offering instead of directly listing on the exchange, the defendants would have been prevented from selling their shares, and the value of the shareholdings would have been diluted.

The suit alleges that the defendants were able to sell their shares before disclosing information they already had that negatively affected the share price, which fell by more than 37% by May 18, after “the compression of the Company’s revenue margins during the first fiscal quarter and the issuance of a dilutive convertible offering were publicly disclosed.” According to the suit:

“Defendants were privy to material, non-public information about the health of the Company ahead of their multi-billion-dollar liquidity event. […] Delaware law does not permit, however […] fiduciaries trading on the basis of, and profiting from, such material, non-public information.”

The company lost over $37 billion in market value after the unfavorable disclosures. However, “Defendants, comprising a majority of the Board, sold $2.93 billion of stock” before the price fell, preventing a loss of over $1 billion to themselves.

The suit charges breach of fiduciary duty and unjust enrichment and demands payment of damages to the company with interest, return of ill-gotten gains to the company and reimbursement of the plaintiff for expenses.

The suit names nine individuals, including CEO Brian Armstrong, former chief product officer Surojit Chatterjee, chief operating officer Emilie Choi, chief financial officer Alesia Hass, chief accounting officer Jennifer Jones and board members Marc Andreesen, Frederick Ersham, Fred Wilson and Kathryn Haun.

A Coinbase spokesperson commented on the case in an email to Cointelegraph: “As the most popular and only publicly traded crypto exchange in the US, we are at times the target of frivolous litigation. This is an example of one of those meritless claims."

This suit was filed on the same day as a class action suit over alleged violations of Illinois privacy laws in its Know Your Customer procedure. On the brighter side, the company launched the Bermuda-based Coinbase International Exchange on May 2.

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