Cathie Wood’s Bold Bet: Doubling Down on Coinbase and Forecasting Bitcoin’s Soaring Journey to $1 Million

• Cathie Wood, CEO of ARK Invest, continues to support Coinbase and speculates on it becoming the sole cryptocurrency exchange in the U.S. due to regulatory crackdowns.
• Despite apprehensions over deflation, Wood reasserts her prediction of Bitcoin’s price reaching $1 million.

Renowned investor Cathie Wood has recently fortified her fund’s investment in Coinbase Global stock and reiterated her prediction for Bitcoin’s price to reach the $1 million mark. In an interview with Bloomberg, Wood, the CEO and chief investment officer of ARK Invest, elucidated the reasons behind this bullish stance.

Her flagship fund, Ark Innovation (ARKK), added nearly 330,000 shares of Coinbase (COIN) on June 6, 2023, after the Securities and Exchange Commission (SEC) filed a lawsuit against Binance, a substantial rival of Coinbase. The stake, valued at approximately $17 million at the time, demonstrated ARK’s continued confidence in COIN. Two other ARK ETFs also added to their COIN holdings.

Despite the current trading value of COIN being considerably lower than ARK’s average entry price, Wood remains undeterred. She believes that SEC enforcement will isolate Coinbase as the primary cryptocurrency exchange in the U.S., provided Coinbase successfully navigates its own legal battles with the SEC.

Wood emphasized a crucial difference between the allegations against Coinbase and Binance. While both face lawsuits over trading and staking unregistered securities, Binance might encounter more grave charges. The CEO of Binance, Changpeng Zhao (or CZ), and three of the exchange’s affiliates have been accused of violating the Commodity Exchange Act and several Commodity Futures Trading Commission regulations.

Wood asserted that these allegations do not pertain to Coinbase and are confident that Coinbase will weather the storm, leaving its primary competitor behind.

While some analysts concur with Wood’s conviction about COIN, others remain skeptical. The stock currently holds a ‘Hold’ rating, with a modest upside predicted from current levels. Some analysts have proposed more optimistic price targets.

Coinbase, though, also faces legal scrutiny from the SEC and potential criminal charges. Accusations that Coinbase invested in projects it planned to list on its platform before public availability have added to the mix. If these rumors indicate an orchestrated pump-and-dump scheme, it would signify serious financial misconduct.

Wood, during her Bloomberg conversation, also reiterated her bullish view on Bitcoin. Despite recognizing deflation as a potential risk, she maintains her belief in Bitcoin’s price soaring to $1 million. Her optimism rests on Bitcoin’s potential as a hedge against traditional financial system risk, especially considering recent bank failures.

She argues that even in a deflationary environment, Bitcoin can outperform due to its role as a counterweight to traditional financial system risk.