In an interview with\u00a0Bloomberg, ARK Invest CEO and chief investment officer Cathie Wood recently discussed<\/a> why her flagship fund, Ark Innovation (ARKK), is adding to its position in shares of Coinbase (COIN) after the Securities and Exchange Commission (SEC) sued Binance, one of Coinbase\u2019s biggest competitors. <\/p>\n ARKK purchased nearly 330,00 shares of COIN on June 6, 2023, worth<\/a> about $17 million at the time, according to disclosure statements. Two other exchange-traded funds (ETFs), Ark Fintech Innovation ETF and Ark Next Generation Internet ETF, also added 35,700 shares (worth $1.8 million) and 53,900 shares (worth $2.8 million), respectively.\u00a0<\/p>\n Across all three funds, Ark\u2019s average entry price<\/a> is $272.75 to $282.93, with the firm\u2019s total position currently valued at $1.77 billion. At the time of writing, COIN is trading at $53.90. Needless to say, the fund is deeply in the red on this trade so far. <\/p>\n As far as why she\u2019s still bullish, her reasoning boils down to this: SEC enforcement will lead Coinbase to become the only game in town when it comes to cryptocurrency exchanges in the United States. Of course, this assumes that Coinbase will triumph in its own legal battles with the SEC.<\/p>\n Wood explained that she sees a difference in the accusations being brought against the two exchanges. While both are facing lawsuits by the SEC over the alleged trading and staking of unregistered securities, Binance may also be facing more serious charges. <\/p>\n Binance CEO Changpeng Zhao, or CZ for short, was faced with a civil enforcement action<\/a> filed by the U.S. regulator for derivatives in March. The action alleges that CZ and three of the exchanges affiliates violated the Commodity Exchange Act and several regulations of the Commodity Futures Trading Commission.<\/p>\n These types of allegations \u201chave nothing to do with Coinbase,\u201d according to Wood. Therefore, she believes that\u00a0Coinbase will survive the storm<\/a> and emerge victorious, with its biggest competitor out of the picture.<\/p>\n It\u2019s hard to say whether or not Wood\u2019s conviction on COIN can be considered well-justified. While some analysts share her view, others do not. The analyst consensus<\/a> on the stock is a Hold rating, with an average price target of $58.49, or roughly 12% to the upside from current levels.<\/p>\n Several notable analysts have come forward with more bullish price targets of $70, including John Todaro and Atlantic Equities.<\/p>\n The relative strength index is almost perfectly neutral at a reading of 49.7, suggesting no decisive direction for COIN at this time.<\/p>\n It could be that COIN is the best and soon-to-be-only option when it comes to U.S.-based cryptocurrency exchanges. But this alone may or may not lead to COIN price appreciation. <\/p>\n When evaluating the future prospects of an equity, most analysts tend not to look at one factor in isolation. Basing an investment thesis on the sole premise that a company\u2019s competitors may be doomed can lead analysts to ignore other, and perhaps even more important, factors. <\/p>\n It\u2019s worth repeating that Coinbase is also facing a\u00a0lawsuit from the SEC<\/a> regarding the trading and staking of unregistered securities. This could eventually lead to the exchange being deemed to have participated in illegal activities. <\/p>\n But perhaps even more concerning than SEC enforcement actions is the allegation that Coinbase may have invested in projects it planned to list on the exchange before they became available to the public.<\/p>\n After Coinbase CEO Brian Armstrong spoke<\/a> with\u00a0The Wall Street Journal on June 10, rumors started circulating that the company may have done just that. In the interview, Armstrong gave no adequate answer to a question concerning whether or not Coinbase invests in tokens listed on the platform.<\/p>\n It\u2019s no secret that almost every single time a new token gets listed on Coinbase, the price tanks.<\/p>\n If this was, in fact, due to an orchestrated pump-and-dump scheme, it could constitute a financial crime of epic proportions.<\/p>\n The question is: Does any potential evidence exist for such a serious accusation?<\/p>\n Well, yes and no.<\/p>\n Looking at Coinbase Venture\u2019s portfolio, it does appear that as many as 30 projects that appeared in the company\u2019s investment portfolio were also listed on the exchange. However, Coinbase Ventures claims that it does not \u201ccoordinate with review and listings teams\u201d and is \u201crun and staffed separately from the main business.\u201d<\/p>\n Factcheck: @brian_armstrong<\/a> dodged the question on whether @Coinbase<\/a> invests in tokens on the platform.<\/p>\n I went through Coinbase Venture’s entire portfolio, and found that these 30 projects were both part of their investment portfolio, as well as traded on @Coinbase<\/a> exchange https:\/\/t.co\/UCqy6kGpvK<\/a> pic.twitter.com\/ltPlhAh74x<\/a><\/p>\n \u2014 Pledditor (@Pledditor) June 10, 2023<\/a><\/p><\/blockquote>\n While this does not necessarily mean that Coinbase used its exchange as a giant pump-and-dump scheme, it may point to one more thing for financial authorities to consider investigating. Needless to say, news of such an investigation would probably not bode well for the share price of COIN.<\/p>\n Related<\/strong>:\u00a0<\/em>SEC asks for more time to respond to Coinbase call for crypto clarity<\/em><\/strong><\/a><\/p>\n In her conversation with Bloomberg, Wood reiterated her view that \u201cBitcoin is a hedge against inflation.\u201d Yet she also noted that she sees deflation as a substantial risk going forward. Despite this, she remains bullish on the Bitcoin price<\/a>, holding firm to her $1 million target.<\/p>\n Bitcoin experienced a golden cross back in February, with the 50-day exponential moving average (EMA) moving above the 200-day EMA. Volumes have been declining, along with the Chaikin money flow, suggesting the potential for sideways trading for the time being.<\/p>\n Even in a deflationary environment, Bitcoin can still outperform due to it being \u201can antidote to counterparty risk in the traditional financial system,\u201d according to Wood.<\/p>\n![\"\"](\"https:\/\/s3.cointelegraph.com\/uploads\/2023-06\/ea153fc1-b868-4222-912f-52c6f5454d5b.png\" "\\"\\"")
Could Coinbase also face criminal charges going forward?<\/h2>\n
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Bitcoin to $1 million?<\/h2>\n
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