Why is Cathie Wood bullish on Coinbase shares?

Coinbase share prices have risen a mere 2% over the past one year, based on data until June 20, 2023, led by shaky bitcoin prices and a looming lawsuit filed against the company by the US SEC. 

However, ace investor Cathie Wood’s ARK Innovation fund and the ETFs it runs has been steadily increasing its stake in the cryptocurrency exchange. 

Cryptocurrency exchanges of late have come under the tight scrutiny of the US SEC - the securities market regulator. The United States Securities and Exchange Commission sued Binance along with its U.S. platform and CEO Changpeng Zhao on June 5 for violating securities laws and offering unregistered securities.

Let’s take a look at why Cathie Wood is so bullish on Coinbase shares?

In a recent interview to Bloomberg, Cathie Wood, the CEO and chief investment officer of ARK Invest, explained why she is increasing her stake in Coinbase? 

According to the interview, the investor feels the lawsuits and added regulatory scrutiny against Binance by the SEC might be more serious in nature compared to Coinbase and the company might emerge as the leading crypto exchange.

According to disclosure statements, ARKK bought approximately 330,000 shares of COIN on June 6, 2023, valued at around $17 million at the time and its other two funds bought about $5 million worth of Coinbase shares at the same time. 

Ark is the fourth-largest holder of Coinbase and has been buying the dip for almost a year. 

Bitcoin target price $1 million?

According to Cathie Wood’s interview with Bloomberg, the investor is still confident in her $1 million target for Bitcoin, as she feels the rising uncertainty in global economic performance bodes well for cryptocurrencies. 

“We’ve just been through an inflationary scare, we think it was very supply chain driven and Bitcoin is a hedge against inflation,” she said. “We also believe now that the bigger risk is deflation, not inflation. Why would Bitcoin do well in that circumstance? It will do well because it’s an antidote to counterparty risk in the traditional financial system.”

This is not investment advice. Investments in the securities market are subject to market risk, read all the related documents carefully before investing. Past performance is not indicative of future returns.