Why Cathie Wood is bullish on Coinbase stock and believes Bitcoin will reach $1 million

In an interrogation with Bloomberg, ARK Invest CEO and CIO Cathie Wood precocious discussed wherefore her flagship fund, Ark Innovation (ARKK), is adding to its presumption successful shares of Coinbase (COIN) aft the SEC sued Binance, 1 of Coinbase’s biggest competitors.

ARKK purchased astir 330,00 shares of COIN connected June 6, 2023, worthy astir $17 cardinal astatine the time, according to disclosure statements. Two different funds, Ark Fintech Innovation ETF and Ark Next Generation Internet ETF, besides bought 35,700 shares, worthy $1.8 million, and 53,900 shares, worthy $2.8 million, respectively. 

Across each 3 funds, ARK’s average introduction price is $272.75 - $282.93, with their full presumption being presently valued astatine $1.77 billion. At the clip of writing, COIN is trading astatine $53.90. Needless to say, the money is profoundly successful the reddish connected this commercialized truthful far.

As acold arsenic wherefore she’s inactive bullish, her reasoning boils down to this: SEC enforcement volition pb Coinbase to go the lone crippled successful municipality erstwhile it comes to cryptocurrency exchanges successful the USA. Of course, this assumes that Coinbase volition triumph successful its ain ineligible battles with the SEC.

Wood explained that she sees a quality successful the accusations being brought against the 2 exchanges. While some are facing lawsuits by the SEC implicit the alleged trading and staking of unregistered securities, Binance whitethorn besides beryllium facing much superior charges.

Binance CEO Changpeng Zhao, oregon CZ for short, was faced with a civilian enforcement enactment filed by the US regulator for derivatives successful March. The enactment alleged that CZ and 3 of the exchanges affiliates violated the Commodity Exchange Act (CEA) and respective CFTC regulations.

These types of allegations “have thing to bash with Coinbase,” according to Wood. Therefore, she believes that Coinbase volition past the tempest and look victorious, with its biggest rival retired of the picture.

It’s hard to accidental whether oregon not Wood’s condemnation connected COIN tin beryllium considered well-justified. While immoderate analysts stock her view, others bash not. The analyst consensus connected the banal is simply a Hold standing with an mean terms people of $58.49, oregon astir 12% to the upside from existent levels.

Several notable analysts person travel guardant with much bullish terms targets of $70, including John Todaro and Atlantic Equities.

3-month illustration of COIN. Source: TradingView

The RSI is perfectly neutral astatine a speechmaking of 49.7, suggesting nary decisive absorption for COIN astatine this time.

It could beryllium imaginable that COIN is the champion and, soon-to-be only, enactment erstwhile it comes to US-based cryptocurrency exchanges. But this unsocial whitethorn oregon whitethorn not pb to stock terms appreciation.

When evaluating the aboriginal prospects of an equity, astir analysts thin not to look astatine 1 origin successful isolation. Basing an concern thesis connected the sole premise that a company’s competitors whitethorn beryllium doomed tin pb analysts to disregard other, and possibly adjacent much important, factors.

Could Coinbase besides look transgression charges going forward?

It’s worthy repeating that Coinbase is besides facing a suit from the SEC regarding the trading and staking of unregistered securities. This could yet pb to the speech being deemed to person participated successful amerciable activities.

But possibly adjacent much concerning than SEC enforcement actions is the allegation that Coinbase whitethorn person invested successful projects it planned to database connected the speech earlier they became disposable to the public.

After Coinbase CEO Brian Armstrong spoke with The Wall Street Journal connected June 10, rumors person been circulating that the institution whitethorn person done conscionable that. In the interview, Armstrong gave nary capable reply to a question concerning whether oregon not Coinbase invests successful tokens listed connected the platform.

It’s nary concealed that astir each azygous clip a caller token gets listed connected Coinbase, the terms tanks.

If this was, successful fact, owed to an orchestrated pump-and-dump, it could represent a fiscal transgression of epic proportions.

The question is: does immoderate imaginable grounds beryllium for specified a superior accusation?

Well, yes and no.

Looking astatine Coinbase Venture’s portfolio, it does look that arsenic galore arsenic 30 projects that appeared successful the company’s concern portfolio were besides listed connected the exchange. However, Coinbase Ventures claims that they bash not “coordinate with reappraisal and listings teams,” and are “run and staffed separately from the main business.”

While this does not needfully mean that Coinbase utilized its speech arsenic a elephantine pump-and-dump scheme, it whitethorn constituent to 1 much happening for fiscal authorities to see investigating. Needless to say, quality of specified an probe would astir apt not bode good for the stock terms of COIN.

Related: SEC asks for much clip to respond to Coinbase telephone for crypto clarity

Bitcoin to $1 million?

In her speech with Bloomberg, Cathie Wood reiterated her presumption that “Bitcoin is simply a hedge against inflation.” Yet she besides noted that she sees deflation arsenic a important hazard going forward. Despite this, she remains bullish connected the Bitcoin price,holding steadfast to her 1 cardinal USD target.

YTD illustration of BTC/USD. Source: TradingView

Bitcoin experienced a aureate transverse backmost successful February, with the 50-day EMA moving supra the 200-day EMA. Volumes person been declining, on with the Chaikin Money Flow, suggesting the imaginable for sideways trading for the clip being.

Even successful a deflationary environment, Bitcoin tin inactive outperform owed to it being “an antidote to counterparty hazard successful the accepted fiscal system,” according to Wood.

Given that 3 of the 4 largest slope failures successful US past person occurred successful the past 3 months, she could person a point.

The adjacent Bitcoin halving lawsuit is little than 1 twelvemonth away. Investors are presently successful the “accumulation” signifier of the cycle, arsenic seen successful the graph below.

Bitcoin halving cycles aligned with capitalist sentiment phases. Source: Galaxy Research

Will the adjacent rhythm apical spot Cathie Wood’s $1 cardinal terms prediction travel to fruition?

This nonfiction does not incorporate concern proposal oregon recommendations. Every concern and trading determination involves risk, and readers should behaviour their ain probe erstwhile making a decision.

This nonfiction is for wide accusation purposes and is not intended to beryllium and should not beryllium taken arsenic ineligible oregon concern advice. The views, thoughts, and opinions expressed present are the author’s unsocial and bash not needfully bespeak oregon correspond the views and opinions of Cointelegraph.