Coinbase bulls face make-or-break test as ARK flags Q4 underperformance

ARK’s Q4 report shows Coinbase dragging innovation ETFs as spot volumes slide, even as AMD, Shopify and Rocket Lab offset losses and Coinbase doubles down on its “everything exchange” pivot.

Summary

• Coinbase was ARK’s biggest Q4 detractor after spot volumes dropped 9% QoQ and an Oct. 10 liquidation event erased $21b in leverage, pressuring crypto-linked holdings.​
• Winners included AMD, Shopify and Rocket Lab, which rallied on AI partnerships, OpenAI integrations and an $816m missile-warning satellite contract that lifted ARK’s space exposure.​
• Coinbase is rolling out stock trading, tokenized equities and Kalshi-powered prediction markets to become an “everything exchange,” a strategy Goldman now backs with a Buy rating.

Coinbase Global Inc. represented the largest detractor across ARK Invest’s innovation-focused exchange-traded funds during the fourth quarter of 2025, according to the firm’s quarterly report released for the period ending December 31.

Cryptocurrency and Coinbase outlook fell in December

The cryptocurrency exchange’s shares declined sharply during the quarter as spot trading volumes on centralized exchanges fell 9% quarter-over-quarter, contributing to underperformance in Cathie Wood’s flagship funds. The quarter followed an October 10 liquidation event that eliminated $21 billion in leveraged positions across the cryptocurrency sector, according to market data.

Coinbase hosted a product event during the quarter showcasing strategic initiatives including plans for on-chain equities, prediction markets, and an AI-powered portfolio advisor.

Roblox Corp. joined Coinbase as a major detractor after reporting third-quarter bookings growth of 51% year-over-year but projecting declining operating margins in 2026 due to higher infrastructure and safety costs. Russia’s ban on Roblox over child safety concerns removed approximately 8% of the platform’s total daily active users, though the region accounted for less than 1% of total revenue, according to the company.

Advanced Micro Devices Inc. emerged as the quarter’s strongest contributor after announcing AI partnerships, including a multiyear agreement with OpenAI and a collaboration with Oracle Corp. for a public AI supercluster. AMD’s third-quarter earnings reflected 36% year-over-year revenue growth driven by demand in the Data Center and Gaming segments, the company reported.

Shopify Inc. rallied following news of its integration with OpenAI, enabling instant in-chat checkout for ChatGPT users. The company reported third-quarter earnings showing 32% year-over-year growth in both gross merchandise value and revenue.

Rocket Lab USA Inc. shares surged following multiple launch agreements, including an $816 million contract to provide 18 missile warning, tracking, and defense satellites in low Earth orbit, representing the largest contract in company history.

Four of ARK’s actively managed ETFs underperformed broad-based global equity indexes during the fourth quarter, while two outperformed or delivered mixed results, according to the firm’s report. Wood stated the innovation space is recovering and being revalued, noting that headwinds that previously pressured disruptive technologies are shifting into structural tailwinds.

Coinbase CEO Brian Armstrong announced earlier in January that the exchange will pursue an “everything exchange” strategy in 2026, combining cryptocurrency, equities, prediction markets, and commodities across spot, futures, and options products. The plan positions Coinbase to compete with traditional brokerages while expanding beyond digital assets into tokenized securities and event-based markets.

“Goal is to make Coinbase the No. 1 financial app in the world,” Armstrong wrote, adding the company is making investments in product quality and automation to support the expansion.

The exchange moved into prediction markets in late 2025, partnering with Kalshi, a federally regulated platform approved by the U.S. Commodity Futures Trading Commission. Leaked screenshots in November revealed a Coinbase-branded prediction interface supporting USDC or USD trading across economics, politics, sports, and technology categories. The product operates through Coinbase Financial Markets, the exchange’s derivatives division, using Kalshi’s regulatory framework to offer event contracts structured as yes-or-no questions.

Coinbase plans to issue tokenized equities in-house rather than through external partners, marking a departure from competitors that rely on third-party providers for stock tokens.

Goldman Sachs upgraded Coinbase from neutral to buy on January 6, raising its 12-month price target and citing growing confidence in the company’s diversification strategy. Analyst James Yaro highlighted Coinbase’s efforts to expand beyond spot cryptocurrency trading, citing initiatives in infrastructure, tokenization, and prediction markets as potential growth drivers.

David Duong, the exchange’s head of investment research, stated the exchange expects broader cryptocurrency adoption in 2026, driven by increased participation from retail and institutional investors as regulatory clarity improves.

Coinbase has threatened to withdraw support for the ongoing draft Crypto Market Structure Bill following last-minute changes the industry claims would effectively end decentralized finance, according to company statements. The legislation faces bipartisan disagreements and banking industry pressure.