The fourth quarter of 2025 proved challenging for Cathie Wood's ARK Invest, as a significant downturn in cryptocurrency markets negatively impacted several of its flagship exchange-traded funds (ETFs). According to the firm's quarterly report, weakness in crypto-linked equities, with Coinbase Global, Inc. (COIN) at the forefront, was a primary drag on performance.
Coinbase emerged as the top detractor across multiple ARK funds, including the ARK Next Generation Internet ETF (ARKW), the ARK Blockchain & Fintech Innovation ETF (ARKF), and the ARK Innovation ETF (ARKK). The exchange's stock fell more sharply than major cryptocurrencies, declining nearly 35% from October to year-end, compared to a 22% drop for Bitcoin (BTC) and a 28% decline for Ether (ETH). ARK attributed this underperformance to a 9% quarter-over-quarter drop in spot trading volumes on centralized exchanges following a major liquidation event on October 10th that wiped out $21 billion in leveraged positions.
Despite Coinbase hosting a product event showcasing long-term strategic ambitions—including plans for on-chain equities, prediction markets, an AI-powered portfolio advisor, and a broader rollout of its Layer 2 Base app—market conditions remained difficult. Following Coinbase, Roblox was the second-largest detractor for ARK's funds, pressured by guidance for declining operating margins in 2026 and a ban in Russia affecting roughly 8% of its daily active users.
Crypto exposure remains a significant part of ARK's portfolios, accounting for approximately 13.7% of ARKW, 14.6% of ARKF, and 7.4% of ARKK. Other top crypto-linked holdings include Robinhood Markets, Circle Internet Group, Block, and spot Bitcoin exposure via the ARK 21Shares Bitcoin ETF.
Looking ahead, Wall Street has turned bullish on Coinbase's recovery prospects. Bank of America upgraded the stock from neutral to buy, following a similar move by Goldman Sachs on January 6th. Goldman raised its 12-month price target to $303, citing growing confidence in Coinbase's diversification into an "everything exchange" strategy for 2026, which aims to combine crypto, equities, prediction markets, and commodities. Coinbase shares surged 8% following the Goldman upgrade.
