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ARK Invest: BlackRock Coinbase tie-in ‘could draw trillions’ in institutional cash


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BlackRock (BLK) logo on a phone display. – Photo: Shutterstock
Coinbase and BlackRock partnership is “by far the strongest signal we’ve seen around institutions considering crypto as a new asset class,” ARK’s analyst Yassine Elmandjra says. – Photo: Shutterstock

The partnership between Coinbase (COIN) and BlackRock (BLK) ‘could usher trillions of dollars into the crypto industry in the coming years,’ Ark analyst, Yassine Elmandjra, said during a monthly portfolio update on Tuesday.

Elmandjra called the partnership between the biggest listed cryptocurrency exchange and the world's biggest asset manager ‘definitely a big win for not just Coinbase, but for the broader crypto asset class.’

Ark's flagship investment vehicle, its $14.5bn ARK Innovation’s (ARKK) ETF overseen by Cathie Wood, sold $75m worth of COIN shares. The sale prevented Ark from fully capitalizing on COIN's surge following the BlackRock deal announcement. But Ark is still one of Coinbase's largest shareholders. On Wednesday, Ark's website showed that Ark's investment in Coinbase was valued at about $420m.

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ARK Innovation ETF (ARKK) price chart

BTC could go $200,000 and $500,000 on the back of the institutional cash

Asked about the partnership, which will give BlackRock's institutional clients access via Coinbase Prime platform, Elmandjra offered a bullish outlook.

He called it “by far the strongest signal we’ve seen around institutions considering crypto as a new asset class and that Wall Street is finally ready to make the leap here.” 

He then went on to share findings from ARK's analysis, which concluded that based on BTC returns over the last ten years, well-diversified portfolios should include 2.5% - 6.5% based on investor risk tolerance. Based on these figures,  BTC allocations of 2.5% - 6.5% to institutional portfolios could impact bitcoin’s price by $200,000 and $500,000, respectively, according to Ark's simulation.

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Big win for COIN and crypto

“This is definitely a big win for not just Coinbase, but for the broader crypto asset class,” Elmandjra said about the BlackRock partnership.

COIN shares have been on a rollercoaster lately, as there was no shortage of market-moving news about the US's biggest cryptocurrency exchange. 

Coinbase Global, Inc. price chart

COIN plunged at the end of July when the news broke that the Securities and Exchange Commission is probing the company for insider trading, but they rallied soon after when the partnership with the world's biggest asset manager was revealed. 

However, COIN shares then erased almost all of their gains after disappointing earnings, which missed analysts' already dire estimates. COIN's revenues in the second quarter of the revenue were down 64% year-on-year amid the digital assets market downturn.

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