Cathie Wood’s investment management firm, Ark Invest, has made the decision to sell shares of Coinbase (COIN) as the stock price reached new year-to-date highs on Tuesday. This move comes despite the ongoing lawsuit by the US Securities and Exchange Commission (SEC) against Coinbase. The crypto exchange’s shares have continued to rally, driven in part by their selection as the surveillance-sharing partner for spot Bitcoin ETFs.

On July 11, Ark Invest’s flagship ARK Innovation ETF (ARKK) sold 135,152 Coinbase shares, amounting to over $12 million. This marks the first sale of COIN stocks by ARK Innovation ETF since July 26 of last year, as per transaction records. In March, Ark Fintech Innovation ETF (ARKF) also sold 160,887 Coinbase shares, breaking its buying streak that had persisted since the previous year. Despite the volatility in the cryptocurrency market, regulatory crackdowns, and industry bankruptcies, Ark Invest remained one of the largest holders of Coinbase, consistently adding to its position.

The decision by Cathie Wood’s Ark Invest to offload Coinbase shares coincided with a 10% rally in the stock price, reaching an intraday high of $92.15 before closing at $89.15. This surge followed the announcement that the Chicago Board Options Exchange (CBOE) had named Coinbase as part of its surveillance-sharing agreements for five spot Bitcoin ETF refiling applications.

Cathie Wood, a well-known crypto bull, selling Coinbase shares suggests a potential profit booking strategy as the stock price has surged 165% year-to-date and 76% in just one month. Notably, Coinbase shares have continued to rise even after market hours.

Meanwhile, the price of ARK Innovation ETF (ARKK) experienced a significant increase on Tuesday, surpassing $47. The fund has seen a year-to-date rally of 55% amid a broader market rebound and positive sentiment.

The decision by Ark Invest to sell Coinbase shares raises questions about the firm’s outlook on the stock and the factors driving its recent price surge. While Ark Invest has been a long-time supporter of Coinbase, consistently adding to its position, the recent sales indicate a change in strategy.

One possible reason for the sale could be profit booking. Coinbase shares have seen substantial gains, outperforming the broader market and rallying to new year-to-date highs. By selling a portion of their Coinbase holdings, Ark Invest may be looking to secure profits and rebalance their portfolio. This approach aligns with Ark Invest’s investment philosophy of actively managing their positions and taking profits when appropriate.

Another factor that could have influenced Ark Invest’s decision is the ongoing lawsuit by the SEC against Coinbase. The regulatory environment for cryptocurrencies remains uncertain, and legal challenges can have an impact on the reputation and future prospects of crypto-related companies. Selling a portion of their Coinbase shares may be a way for Ark Invest to mitigate potential risks associated with the lawsuit.

It’s worth noting that despite Ark Invest’s decision to sell Coinbase shares, the market sentiment towards the crypto exchange remains positive. The partnership between Coinbase and spot Bitcoin ETFs has boosted investor confidence and fueled the stock’s rally. The selection of Coinbase as a surveillance-sharing partner by the CBOE further reinforces the company’s position as a key player in the cryptocurrency ecosystem.

As the crypto landscape continues to evolve, market participants will closely monitor the actions of influential investors like Ark Invest to gain insights into potential market trends. The decision to sell Coinbase shares while the stock price is on the rise indicates a prudent approach to secure gains in a market that has witnessed substantial growth. It also underscores the importance of actively managing portfolios and adapting investment strategies in response to changing market dynamics.