You wouldn’t blame investors for being scared of the crypto world right now. The FTX drama that’s all over social media may be the finance story of the year, not an easy feat in a volatile 2022. If those investors look past the Byzantine (Bahamian) palace drama and Enron comparisons, they can find a Coinbase (COIN) ETF in Cathie Wood’s ARK Fintech Innovation ETF (ARKF) buying the stock that may be poised to come out of this crisis as a sober option for the crypto-curious.
First of all, COIN isn’t just a Bitcoin platform. COIN has several cryptocurrencies available for traders and investors, with exposure to the ever-tradeable US Dollar Coin (USDC). Add in its use for payments with the Coinbase Card service, and its use as an all-around payment service online makes sense.
Combine that with its status as a U.S.-based company, which places it under stricter regulations than FTX faced in the Bahamas, it is required to share its financial data publicly, and it certainly looks like the more stable opportunity.
Digital assets are not likely to go away in an increasingly globalized world, and COIN is fairly well positioned to remain a key player facilitating a movement for decentralized finance, especially since the collapse of Sam Bankman-Fried’s rival platform. FTX’s collapse may in fact allow Coinbase to exert more pricing power thanks to the loss of a key competitor, with a low barrier of entry for challengers a concern in such a decentralized industry.
Should cryptocurrencies including, but not limited to Bitcoin come out of this crisis just a little worse for the wear, a Coinbase ETF like ARKF could make sense – and that may explain part of why ARK CEO Cathie Wood is buying COIN.
ARKF holds COIN as its fourth largest-weighted stock at 5.9%, making it a notable piece of its portfolio. The ETF has returned 12.3% over one month, outperforming both the ETF Database Category Average and Factset Segment Average in that time. ARKF has seen increased inflows since the FTX drama broke out as well, up $1.2 million in five days based on net inflows.
We may not see crypto spring for months to come, but for investors looking for innovative, long-term plays, ARKF’s decision to add COIN could prove to be an interesting opportunity in the wake of the FTX disaster.
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