700 million US dollars against the trend to build positions in Bitcoin and COIN stocks, how to interpret the encryption investment actions of ARK Fund?

According to media reports, Ark Investment Management Company (ARK INVEST) has recently purchased 20 million US dollars of Bitcoin. In addition, the company’s funds continued to purchase Coinbase stock (COIN) last week, with a total of 706 million US dollars held so far. This all comes after the price of Bitcoin plummeted and Coinbase stock continued to decline.

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1. The stock price of Coinbase plummeted, and ARK increased its position against the trend

In the past week, the ARK Innovation ETF under ARK has continued to buy a large number of Coinbase stocks, with an average daily increase of 160,000 to 220,000 shares. As of now, the ETF under Ark has purchased 3.968 million shares of Coinbase Global Inc, with a position value of approximately US$891 million.

Coinbase landed on Nasdaq on April 14, which was listed as a milestone event in the encryption field, but the performance of Coinbase stock in the secondary market was not satisfactory, and continued to fall. As of May 25, the closing price was $225.3.

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2. I bought Bitcoin for the first time after the sharp drop, and bought a lot of GBTC

In addition to Coinbase stock, it is not difficult to find that ARK is also a large holder of Tesla stock, currently holding a total of 4.904 million shares of TSLA. This is not unexpected, because ARK has always been Tesla's "milk king". In January 2020, ARK Fund founder Catherine Wood (“Sister Wood”) stated on CNBC that she believed that Tesla’s share price was expected to exceed $6,000 in the next five years.

But it’s worth noting for crypto investors that ARK bought $20 million of Bitcoin directly for the first time after the recent Bitcoin crash. Ark Investment Management purchased $19,872,939 in bitcoin, according to its filing with the U.S. Securities and Exchange Commission (SEC). The Ark Crypto Fund requires a minimum investment of $1 million and has raised nearly $20 million from 12 investors.

For this investment, Cathie Wood, CEO of Ark Investment Management, believes that Bitcoin may rise after falling as much as 50%.

In addition, ARK is still buying a large amount of Grayscale Bitcoin Trust (GBTC). On May 24-25, ARK bought 670,000 shares again. At present, ARK holds a total of 7.61 million shares of GBTC (as of May 25 day, worth about $246 million), accounting for 4.39% of the fund's total portfolio.

ARK Fund, which has always favored new technologies and is known for its "disruptive innovation" investment choices, has made a series of investment actions in Bitcoin, GBTC, and Coinbase stocks. It is not difficult to see that it is still optimistic about the prospects and future growth of the encryption market.

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3. "Sister Wood" is firmly optimistic about the logic of the future market of encryption

In fact, this has something to do with ARK's consistent behavior and "Sister Wood"'s analysis logic of the market.

ARK Invest was established in January 2014. It was founded by Catherine Wood (known as "Sister Wood") and has served as the CEO and fund manager of the fund until now.

ARK Invest currently has 8 ETFs, of which 6 are active ETFs and the other 2 are passive. The currently active teams include ARKK, ARKQ, ARKW, ARKG, ARKF, and ARKX (newly established in 2021). ARK Invest's investment is mainly concentrated in several innovative fields such as artificial intelligence, autonomous driving, financial technology, gene sequencing, robotics, and 3D printing.

Before founding ARK, Wood had more than 40 years of experience in the field of financial investment. She believes that traditional large-scale funds have relatively backward analytical thinking on technology stocks, and it is difficult to keep pace with the ever-changing era. This is the main reason why she founded ARK. Wood and ARK became more famous in 2020. The five funds she manages (except ARKX) have an average return rate of 170%, which stands out among US ETF products. Among them, ARKK, the largest flagship product, has almost an average annualized return rate of nearly 40% in the past five years, which is twice the average level of Buffett. " and other titles.

The success of ARK is mainly due to its investment in new technology stocks such as Tesla. From 2016 to 2018, when almost the entire market questioned Tesla, "Sister Wood" continued to increase its holdings of Tesla stocks. At the end of January 2020, ARK Invest pointed out that the target price of Tesla stock was $7,000.

As long as you are optimistic, you will firmly hold it, even if you go against the trend and increase your position, this is probably the investment logic of ARK "Sister Wood".

Despite the recent market slump and downturn, "Sister Wood" still believes that Bitcoin will reach a price of $500,000.

ARK predicts that if institutional investors allocate 2.55% of Bitcoin, the price is expected to increase by $200,000; if the allocation ratio reaches 6.55%, the price will increase by $500,000.

In the ARK 2021 Big Ideas released on January 27 this year, "Sister Wood" devoted two chapters to expounding the fundamentals of Bitcoin and the in-depth analysis of institutional allocation of Bitcoin. It is expected that Bitcoin will become the asset of many institutions and listed companies in the future. Part of the balance sheet, it will be a sea of ​​stars to welcome Bitcoin.

As for why Cathie Wood is so bullish on Bitcoin, she said in an interview with Yahoo Finance:

On the one hand, the speculative component of Bitcoin is not as high as in the past, and the investment group is becoming more and more mature. Before Tesla, companies such as MicroStratey and Square had announced their holdings of Bitcoin.

Bitcoin, on the other hand, is the only investment option that has had a low correlation with other traditional assets over the past decade. That means, it's a good diversification option for institutional investors.