ARK Warns of Coming Crypto Shutdowns as It Buys into Established Firms
Cathie Wood's ARK Invest has been buying up stocks in established companies like Tesla and SpaceX, but that doesn't mean it's ignoring the struggles of the crypto market. Lorenzo Valente, who runs digital assets research at ARK, warns that crypto bankruptcies and shutdowns are about to increase.
According to Valente, the concentration of revenue among top apps has reached an all-time high, with Hyperliquid (HYPE), Pump.fun, and Ethena (ENA) accounting for nearly 80% of all crypto app revenue. He expects this trend to intensify in the coming months, leading to more mergers and acquisitions, Chapter 11 filings, shutdowns, and acqui-hires.
However, ARK's stock purchases suggest that it's focusing on companies with established revenue streams, rather than struggling crypto projects. The investment firm has been buying up Tesla shares, adding over $860 million to its stake in the company, as well as increasing its stake in SpaceX by another $12 million.
The contrast between ARK's stock picks and Valente's warning highlights the challenges facing many crypto projects. With Bitcoin prices down 46% in a year and other tokens suffering similar declines, it's becoming increasingly difficult for smaller teams to earn revenue. This trend may lead to more shutdowns and bankruptcies in the coming months.