After the difficult previous year that triggered several negative developments and sent crypto prices down by more than 75%, 2023 has begun with a bang for the industry.

The flagship cryptocurrency, Bitcoin, has made an impressive rally, up by more than 40% since the start of the year. Other altcoins have mimicked Bitcoin’s behavior and have soared in their values too. The rally has also bled over to the crypto-focused stocks benefiting from the shift in sentiment.

Cathie Wood, the CEO of investment management firm ARK Invest, expects the shares of a couple of crypto stocks to deliver further upside over the coming months.

Cathie shows why Coinbase is a good investment                                                      

Since the beginning of the year, Cathie Wood’s ARK Invest has continued purchasing Coinbase shares amid the latest cryptocurrency market decline.

Last week, Cathie Wood bought additional shares of Coinbase crypto exchange for her company's exchange-traded funds after purchasing them earlier this month.

On Friday last week, February 24, Ark Invest purchased 150,192 Coinbase shares to its ARK Innovation ETF (ARKK) and the ARK Next Generation Internet ETF (ARKW), consisting of 128,396 shares and 21,796 shares, respectively, as per its latest trade filing.

On February 13, Ark bought another 162,325 shares of Coinbase exchange worth $9.26 million and split them across the ARK Innovation ETF (ARKK) and the ARK Next Generation Internet ETF (ARKW)—139,105 and 23,220 shares, respectively. This followed a series of other purchases that the firm made between January 5 and January 11, when it bought a total of $10.47 million worth of Coinbase stock.

The latest purchase means that the famed investment management company currently holds $18 billion worth of Coinbase stock, with a 4.58% stake in the cryptocurrency firm.

A measured approach for individual investors

Cathie Wood is the leading investor more committed to the high-flying tech and crypto sectors than anybody else. Her wide followers make her investing strategies an important lesson for other investors.

Cathie has continued to buy crypto stocks (such as Coinbase Global, Silvergate Capital, and Grayscale Bitcoin Trust), especially buying the dips when stocks she likes come down.

Based on her investing experience, Investors can purchase cryptos by buying small amounts of several different coins. But a better way to gain exposure to the industry is to invest in bigger and more established companies that benefit from the increased popularity of crypto assets.

Crypto stocks can be a great investment with astronomically high returns, but that comes with substantial downsides. Investors should, therefore, analyze whether their liquidity requirements, risk tolerance, and time horizon fit their investor profile.

Such investments have lots of potential, but investors should maintain proper diversification in their investing strategies.

From the look, many of Wood's top choices for crypto stocks are tremendous long-term buys. While many investors are fleeing the crypto space, the ARK Invest CEO keeps the faith and remains optimistic about the long-term value of her preferred crypto stocks and is investing accordingly.

Nicholas Otieno

CBW - External Analyst

KENYA