Ark Invest has sold 13,780 shares of Coinbase, valued at approximately $3.9 million, as part of a rebalancing strategy within its Fintech Innovation ETF (ARKF).

This sale occurred on Dec. 18, coinciding with a notable drop in Coinbase's stock price, which closed at $279.86 —down over 10% following Federal Reserve Chair Jerome Powell's hawkish comments.

The firm’s decision to offload Coinbase shares is part of its strategy to prevent any single holding from exceeding 10% of its ETF portfolio, ensuring a diversified investment approach. As of the latest disclosures, Coinbase is the second-largest holding in ARKF, comprising 9.9% of the fund, just behind Spotify. The market value of Ark's Coinbase holdings now stands at around $110 million.

The recent volatility in Coinbase's stock can be attributed to Powell’s remarks, which altered market expectations regarding future interest rate cuts. Following a widely anticipated 25-basis-point rate cut, Powell stated that the outlook for 2025 rate reductions had shifted from four cuts to two, unsettling investors.

This shift in tone has also affected the broader crypto market, with Bitcoin experiencing a significant decline, dropping from above $108,000 to below $100,000 before recovering slightly.

Despite the downturn, Bitcoin spot ETFs saw strong inflows, adding $275.3 million on the same day, continuing a positive trend that has totaled over $6.7 billion in recent weeks. Ethereum spot ETFs also reported net inflows, totaling nearly $2.5 billion over the same period.