Cryptocurrency concept stocks crash! Ark invests 17 million to buy BMNR and CRCL, reduces Tesla holdings

Bitcoin plummeted to $85,000, triggering a全面崩跌 of cryptocurrency concept stocks. Ark Invest, through its funds, aggressively bought BMNR, COIN, CRCL, XYZ, BLSH, SLMT, and ARKB, while simultaneously taking profits and selling Tesla (TSLA) stocks during rallies. Tesla’s price neared its all-time high, prompting Ark to lock in gains by selling 124,867 shares worth $59 million.

Collective Collapse of Cryptocurrency Concept Stocks

(Source: Trading View)

Bitcoin fell sharply from $108,000 to $85,000, a decline of over 21%. This crypto market bloodbath directly affected related concept stocks. BitMine (BMNR), which surged to $160 during its early transformation phase, has now crashed to $30, down 81%. Circle (CRCL), which IPO’d at $31 on June 5, surged near $300 after opening at $69, but has since fallen to $75, causing significant losses for investors. Cryptocurrency exchange Bullish Global IPO’d at $37 on August 13, opening at a high of $90, but in recent months, it dipped below its IPO price.

This brutal decline reflects the high volatility of cryptocurrency concept stocks. When Bitcoin rises, these stocks tend to rise even more, offering leveraged investment opportunities. Conversely, when Bitcoin falls, declines are amplified. Investors see these companies as proxies for Bitcoin or Ethereum investments, so their stock prices are highly correlated with crypto prices. However, this correlation can distort under extreme market conditions—during panic, stock declines often exceed the value of the crypto assets held.

Yesterday, BitMine announced it was adding another 100,000 ETH to its holdings, yet its stock still fell over 11% to close at $30.95. The phenomenon of “buying more while prices plummet” indicates market pessimism about crypto concept stocks has reached an extreme. Usually, announcing increased holdings signals management’s confidence in asset value, but in current conditions, this signal has failed. Investors are more concerned that BitMine faces approximately $3 billion in unrealized losses, and continued accumulation may widen losses rather than create value.

Overview of the Crypto Concept Stocks’ Sharp Decline

BitMine (BMNR): from $160 to $30, down 81%, Ark bought in for $17 million

Circle (CRCL): from nearly $300 to $75, down 75%, Ark increased holdings by $10.8 million

BULLISH (BLSH): opened at $90, fell below IPO price of $37, Ark bought in for $5 million

COIN: significantly retraced due to crypto market drag, Ark continues to add

Ark’s Contrarian Investment Logic and Risks

(Source: Trading View)

Ark’s large-scale buying during the collective collapse of crypto concept stocks is a hallmark of Cathie Wood’s contrarian strategy. In late July, Ark conducted a block trade via a market price equity offering, purchasing about 4.77 million shares of BitMine at an average cost of around $38. Cathie Wood has publicly praised BitMine’s strategy multiple times, so seeing its share price drop to $30, she naturally took the opportunity to buy cheap.

Similarly, with Circle, Ark bought CRCL shares at low cost during IPO, occasionally selling some to lock in gains, and recently added more during its decline. This “buy → sell high → buy low” cycle is typical swing trading. If the long-term trend of the assets is upward, this strategy can generate gains while maintaining core holdings.

Ark also increased holdings in crypto exchanges COIN, payment platform Block (XYZ), Solmate (SLMT), and its own Bitcoin ETF ARKB. Yesterday, Bullish Global’s funds bought 122,360 shares worth about $5 million. This comprehensive accumulation suggests Ark believes current valuations of crypto concept stocks are overly beaten down and that a significant revaluation opportunity exists.

However, this contrarian approach carries high risks. If Bitcoin and Ethereum continue to decline or remain in a prolonged bear market, the fundamentals of these stocks will worsen. BitMine, with $3 billion in unrealized losses, will see losses further expand if Ethereum falls to $2,000 or lower. While Circle’s stablecoin business generates ongoing revenue, its valuation heavily depends on the crypto market size; in a bear market, shrinking stablecoin usage would directly impact earnings. Essentially, Ark’s bets are a high-stakes gamble on a long-term crypto bull market.

Tesla Lock-in Profits and Rebalancing Wisdom

Tesla’s stock price approached its all-time high yesterday, prompting long-term supporter Ark to take profits during the rally. Ark’s funds, ARKK and ARKW, sold a total of 124,867 TSLA shares yesterday, worth about $59 million. This operation sharply contrasts with its increased holdings in crypto stocks: selling assets near their highs and buying assets during their lows. It exemplifies a rebalancing strategy.

Rebalancing aims to maintain the original asset allocation while enabling buy-low and lock-in gains. After a significant rise in an asset, its weight in the portfolio exceeds the target, so part of it is sold to realign with the target. Conversely, after a decline, its weight drops below target, so buying restores its proportion. This mechanical discipline helps avoid impulsive decisions and enforces a “buy low, sell high” approach.

Notably, Tesla remains Ark’s largest holding, accounting for 12.17% of the portfolio, suggesting that this rebalancing is not an outright bearish stance on Tesla. If Ark were truly bearish, it would significantly reduce or completely exit its holdings. The current sale appears more like profit-taking and freeing up funds for crypto stock accumulation. This operation reflects institutional discipline: even if long-term bullish on an asset, they reduce exposure when prices near highs to avoid overconcentration.

Ark’s overall strategy can be summarized as: accumulating beaten-down assets in times of panic, and reducing overvalued assets during greed. Currently, crypto stocks are in extreme panic, and Ark is buying heavily, betting on a rebound. With Tesla near its peak, Ark locks in profits. Whether this contrarian approach succeeds will be tested over the next 6 to 12 months. If Bitcoin returns to $100,000 and hits new highs, crypto stocks may have a revenge rally, proving Ark’s bottom-fishing extremely wise. Conversely, if the crypto market enters a prolonged bear phase, losses will deepen, and this contrarian strategy could become a textbook failure.