- ARK Invest sold $150 million worth of Coinbase shares amid Bitcoin’s new highs, signaling profit-taking.
- Coinbase anticipates challenges citing potential headwinds like the Federal Reserve’s BTFP expiry and US CPI data.
- Spot Bitcoin ETFs exert significant influence on market dynamics surpassing historical price cycle relevance.
Cathie Wood’s ARK Invest appears to be taking profits on its Coinbase (COIN) holdings even as Bitcoin (BTC) reaches new highs. This news comes amidst a report by Coinbase itself acknowledging both the positive momentum and potential challenges that the market faces.
ARK Invest sold over 580,000 shares of Coinbase in the week ending March 8 which is valued at roughly $150 million.
In a week marked by a new all-time high for Bitcoin (BTC), cryptocurrency exchange Coinbase issued a report acknowledging the achievement while also outlining potential challenges in the short term. Coinbase analysts David Duong and David Han noted that the “short covering move” that initially fueled Bitcoin’s rise appears to be exhausted.
However they see continued buying pressure from US spot Bitcoin ETFs. This is reflected in an average daily net inflow of $400 million over the past two weeks as per the report.
Despite these positive indicators, Coinbase anticipated some “important macro and technical headwinds” in the coming weeks. The expiry of the Federal Reserve’s Bank Term Funding Program (BTFP) on March 11 is one potential concern as it could introduce vulnerabilities into the financial system. Also the upcoming US CPI print for February which is expected on March 12 could trigger a pullback in cryptocurrencies if it yields negative surprises.
The report also acknowledgef the significant influence of spot Bitcoin ETFs on market dynamics potentially rendering historical price cycles less applicable. While traditional analysis focused on newly mined coins, the report highlighted the substantial growth of Bitcoin held by ETFs which has outpaced miner generation by nearly threefold. The report read,
The reality is that growth in liquid circulating supply (which we define as bitcoin moved within the past 3 months) has substantially outpaced that of cumulative ETF inflows. In fact, while ~150k new BTC have been mined since 4Q23, the liquid BTC supply increased by a far greater 1.2M.
The report also explored upcoming developments in the Ethereum (ETH) ecosystem. The Dencun fork which is anticipated for March 13 is expected to benefit layer-2 scaling solutions. According to Coinbase, while there are concerns about potential dilution of ETH revenue in the short term, the impact is likely to be minimal.
The report further explored the recent surge in on-chain trading volumes, partly attributed to a resurgence of meme coin activity. This growth is particularly pronounced on the Solana (SOL) network whose decentralized exchange (DEX) market share has increased more than fivefold since November 2023.
