Cathie Wood takes over Bitcoin, Coinbase and Tesla as investors flee

This week, Ark Investment Management funds bought nearly 75,000 shares of Tesla, close to 300,000 of Coinbase, and more than 315,000 of the beleaguered Grayscale Bitcoin Trust, according to Bloomberg.

Such investments are not for the faint of heart. Tesla stock has fallen about 61% from its peak late last year. Coinbase shares fell to an all-time low this week, down more than 80% for the year. And Bitcoin, the largest cryptocurrency, has lost more than 60% of its value this year.

Admittedly, not everyone is sold on Wood’s optimism. As The Wall Street Journal reported this week, even many investors in the flagship ARK Innovation ETF are losing their convictions. The shares in that fund are down around 60% this year.

But even with the recent FTX collapse, which shook investors’ faith in all things crypto, “our conviction in the underlying public blockchain infrastructure, which continues to function as designed, has only increased,” said Frank Downing, a director of research at ARK, in a video the firm posted on Twitter this month.

On Saturday, Wood tweeted“The Bitcoin blockchain didn’t skip a beat during the crisis caused by opaque centralized actors. No wonder Sam Bankman Fried didn’t like Bitcoin: It’s transparent and decentralized. He couldn’t control it.”

Her firm also shared Bitcoin trading data showing that the supply of the cryptocurrency held by long-term holders remained flat during November, indicating that these investors have a “long-term focus and high conviction” despite the turmoil. In a Bloomberg interview last month, she repeated her prediction that Bitcoin would reach $1 million by 2030 (it’s now below $17,000), saying it’s “coming out of this smelling like a rose.”

As for Coinbase, she said the uncertainty surrounding FTX could actually help it.

“This is a regulated onshore company,” Wood noted in an interview with Bloomberg last month. “I think Coinbase is going to come out here looking very, very strong. It just lost a very big competitor in FTX.”

Coinbase CEO Brian Armstrong, speaking at a crypto event a few weeks ago after the collapse, claimed that Coinbase is a publicly traded company, and thus far more transparent than FTX.

“You can read our financial statements,” Armstrong said. “They are audited by a third party, you don’t have to trust us. All customer funds are segregated. We do not invest any client funds without their explicit direction.”

This week, Mazars, a French accounting firm, suspended its work underwriting assets held in reserve by cryptocurrency exchange Binance and other players in the space. Crypto firms have been unable to sign deals with Big Four accounting firms as they have sought to boost their credibility amid the FTX fallout.

Wood also recently reiterated that she is not worried about Tesla. This week, a major shareholder called for a new CEO to replace Elon Musk, who he claimed is too distracted by reshaping Twitter to do the job right.

According to recent research from S&P Global Mobility, more automakers will pile into EVs with cheaper options — especially with models costing less than $50,000, “where Tesla is yet to really compete.” Tesla’s EV market share will fall below 20% by 2025, down from 65% this year (through the third quarter), it predicted.

But Tesla “takes a disproportionate share, and will continue to do so, of a market that we believe by 2027 will account for 85% to 95% of all cars sold in the world,” she told Bloomberg. “It’s on auto pilot.”

Amid doubts about her investments and strategy, Wood recently tweeted that the companies in her fund “sacrifice short-term profitability for exponential and highly profitable long-term growth.”

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