Has springtime come early in the world of crypto? The world’s most recognizable digital asset, bitcoin, has spiked 12% over the last five days and 26% over one month after dropping 50% over one year. Bitcoin rebounding reinvigorates the investment case for a digital asset and fintech platform like Coinbase (COIN), which investors can keep an eye on in an active fintech ETF like ARK Invest’s ARK Fintech Innovation ETF (ARKF).
ARK Invest CEO Cathie Wood and the firm’s investment committee have been buying low on COIN for weeks, based on the firm’s belief in the company’s disruptive innovation among fintechs and as a key trading platform for digital assets. ARKF itself most recently added 144,000 shares of COIN on January 5, while the firm’s overall flagship, the ARK Innovation Fund (ARKK), added 52,000 COIN shares this past Thursday.
COIN shares were up around 15% on Martin Luther King Day thanks to bitcoin rising above $17,000 for the first time since December 16, as well as on-chain analysis highlighting a significant oversold condition for the stock, according to ARK Invest. Risk appetite has grown as well in the broader equity market, which could aid COIN yet more moving forward.
Whales could be playing an important role in bitcoin’s price rebound, too, with bitcoin mining also becoming more difficult, dropping supply. Add in the news that COIN looked to cut costs by reducing its total staff by 20%, and ARK’s case for COIN becomes even clearer.
ARKF holds COIN at a 9.9% weight, its third-largest stock weight after Shopify (SHOP) and Block (SQ) at 11.4% and 11% respectively. The active fintech ETF charges 75 basis points for its exposures, actively investing in fintech platforms as well as firms benefitting from advances in mobile transaction and blockchain technology.
The strategy has outperformed its ETF Database category average and its FactSet segment average over one month, with its 5.4% outperforming the averages’ 0.7% and 4.1% respective returns.
Investors may have concerns about crypto-related stocks, given the crypto winter that digital assets have faced over the last year. ARKF and its disruptive innovation focus look to the long term for COIN, however, with the platform’s future potential as a hub for crypto and blockchain activity. For those investors who are looking for an exposure to COIN and other fintechs, ARKF may be an ETF to watch in the weeks ahead.
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