Coinbase delivered the single biggest blow to ARK Invest’s performance in the fourth quarter of 2025, marking one of the most turbulent periods the crypto-focused asset manager has faced in recent years. As crypto markets unraveled and trading activity slowed, the exchange’s sharp stock decline weighed heavily on Cathie Wood’s flagship innovation ETFs.
According to ARK’s quarterly report, Coinbase was the top detractor across its actively managed funds for the three months ending December 31. The pressure came as spot trading volumes on centralized exchanges fell 9% quarter over quarter, reflecting fading speculative appetite after months of extreme volatility.
This downturn unfolded despite Coinbase hosting a high-profile product event outlining its long-term ambitions—from on-chain equities and prediction markets to an AI-powered portfolio advisor. Big ideas, however, were no match for a market still reeling from an October 10 liquidation cascade that erased nearly $21 billion in leveraged crypto positions.
Crypto Shockwaves Ripple Through ARK’s Portfolio
Coinbase wasn’t the only name dragging on ARK’s returns. Roblox emerged as another major headwind after posting strong third-quarter bookings growth of 51% year over year, only to warn that operating margins would shrink in 2026 due to rising infrastructure and safety costs.
Adding to the pressure, Russia banned Roblox over child safety concerns, eliminating about 8% of its daily active users. While the region contributed less than 1% of total revenue, the headline risk rattled investors.
Not all holdings disappointed. Advanced Micro Devices stood out as the quarter’s strongest contributor after unveiling major AI partnerships, including a multiyear deal with OpenAI and a collaboration with Oracle to build a public AI supercluster. AMD’s third-quarter revenue jumped 36% year over year, fueled by booming demand in data center and gaming chips.
Shopify also impressed markets after announcing an OpenAI integration that enables in-chat checkout for ChatGPT users. The company reported 32% year-over-year growth in both revenue and gross merchandise value. Meanwhile, Rocket Lab shares surged following multiple launch agreements, capped by an $816 million contract to deploy 18 missile warning and defense satellites in low Earth orbit—the largest deal in its history.
Despite these bright spots, four of ARK’s actively managed ETFs underperformed global equity benchmarks in Q4, while only two delivered mixed or positive results.
Bitcoin’s Slide Adds to the Pain
Crypto-heavy ARK portfolios faced added stress as Bitcoin slid sharply in the final months of the year. After peaking near $126,000 in October, the world’s largest cryptocurrency fell below $88,000 by year-end, amplifying losses across digital asset exposures.
Still, Cathie Wood struck a cautiously optimistic tone, saying the innovation space is “recovering and being revalued,” with former headwinds for disruptive technologies beginning to turn into long-term structural tailwinds.
Coinbase’s Bold Bet: Becoming an “Everything Exchange”
While Q4 was bruising, Coinbase is looking far beyond short-term pain. CEO Brian Armstrong recently revealed plans to transform the platform into an “everything exchange” in 2026—one that blends crypto, equities, commodities, and prediction markets across spot, futures, and options.
The strategy would push Coinbase into direct competition with traditional brokerages, while also deepening its exposure to tokenized securities and event-based markets that have already attracted billions in trading volume.
“The goal is to make Coinbase the #1 financial app in the world,” Armstrong said, noting heavy investments in automation and product quality to support the expansion.
A key piece of that vision is prediction markets. In late 2025, Coinbase partnered with Kalshi, a federally regulated platform approved by the U.S. Commodity Futures Trading Commission. Leaked screenshots later revealed a Coinbase-branded interface allowing USD or USDC trading on yes-or-no event contracts spanning politics, economics, sports, and technology—all operating through Coinbase Financial Markets under Kalshi’s regulatory umbrella.
Tokenized Equities and Wall Street Confidence Return
Coinbase is also taking a different path from rivals like Robinhood and Kraken by planning to issue tokenized equities in-house rather than relying on third-party providers. The move signals confidence in both regulatory momentum and internal infrastructure.
That confidence appears to be spreading. On January 6, Goldman Sachs upgraded Coinbase from neutral to buy, raising its 12-month price target to $303. Analysts cited growing belief in the company’s diversification strategy, highlighting infrastructure services, tokenization, and prediction markets as key growth drivers.
The market reacted quickly. Coinbase shares jumped 8% following the upgrade, closing at $254.92. The exchange’s head of investment research, David Duong, reinforced the bullish case, pointing to broader crypto adoption in 2026 as regulatory clarity improves and institutional participation accelerates.
Still, challenges remain. Coinbase has warned it may withdraw support for the latest draft of the U.S. Crypto Market Structure Bill, arguing last-minute changes—driven by bipartisan tensions and banking industry pressure—could effectively undermine decentralized finance.
From Q4 Pain to 2026 Promise
For ARK Invest, Q4 2025 will be remembered as a quarter defined by crypto volatility and painful drawdowns. For Coinbase, it may ultimately be seen as a transition period—one where short-term market weakness collided with long-term ambition.
Whether the “everything exchange” vision delivers on its promise could determine not only Coinbase’s future, but also whether ARK’s biggest Q4 detractor becomes one of its most powerful comeback stories in 2026.