Cathie Wood’s Ark Invest Offloads Entire GBTC Holdings Ahead of Spot Bitcoin ETF Approval
Asset management firm Ark Invest has reportedly offloaded all the holdings of Grayscale Bitcoin Trust (GBTC) stock to reposition itself for the imminent approval of a spot Bitcoin exchange-traded fund.
Ark Invest has wholly exited its GBTC position as the fund manager aims to position itself ahead of a potential Bitcoin ETF approval.
Wood’s Firm Divests Wholly From GBTC
The move by Cathie Wood’s firm completes the divestment of its exposure to the GBTC as the fund manager awaits approval of its bid for the spot Bitcoin ETF named. Ark Invest is among the 14 hopefuls for the approval, with its bid identified as Ark 21Shares Bitcoin ETF, which will trade under ticker ARKB.
The move to liquidate the GBTC shares is informed by the need for readiness for its bid for the spot Bitcoin ETF currently under review by the US Securities and Exchange Commission (SEC). The application by Wood’s firm follows within its joint operation with European-based exchange-traded product provider 21Shares to offer a range of crypto ETFs.
The proactive move by the fund manager began in October when it divested exposure to GBTC, profiting from the price rally. The DCG-owned GBTC has, since mid-2023, realized bullish momentum to erode the huge discount in its price relative to the underlying value.
The divestment is timely given that Wood’s firm will profit from shares it bought at a bargain. The Wednesday incident is notable given that ARK Invest completely exits GBTC.
In an early Wednesday post on X (formerly Twitter), Bloomberg ETF lead analyst Eric Balchunas revealed that a holdings file from Wood’s firm indicated 0% weight on GBTC.
Analyst Consider Ark Invest’s GBTC Sales and BITO Allocation Temporary
Further scrutiny of Ark Invest’s activity on Wednesday shows the fund manager allocated nearly $100M towards the ProShaes Bitcoin Strategy ETF (BITO).
BITO involves a futures-based contract guaranteeing investors exposure to the Bitcoin price, though not holding the underlying asset. The acquisition of BITO ETF places Wood’s firm as the second-largest holder behind the multinational investment bank Goldman Sachs.
The market analysts reviewing Ark Invest activity consider the decision to offload the GBTC shares and the million-dollar allocation to the BITO ETF temporary initiative.
Balchunas observed that ARK moved into becoming the second-largest BITO holder, portraying a temporary parking spot. Such a move constitutes a strategic initiative by institutions that leverage the highly liquid ETFs to transition.
The lead Bloomberg analyst indicates that exiting from fellow competition for spot Bitcoin ETF will deliver a seamless transition for Ark Invest in anticipation that it realizes SEC’s approval to offer spot Bitcoin ETF alongside other applicants.
The decision by Gary Gensler-chaired SEC in January would inform the move by the fund manager. The approval of its Ark 21Shares Bitcoin ETF could prompt Wood’s firm to allocate $100 million in BITO shares to its new product. Alternatively, ARK may convert the cash realized from GBTC sales into bargain purchases or more unique products.
Ark Invest Offloads Shares in Crypto Firms
An in-depth activity by Wood’s Ark Invest reveals that it offloaded shares in other entities, notably crypto firms. Ark sold a portion of its holdings in California-based crypto exchange Coinbase (COIN). The sale of 148,885 COIN stock earned Ark Invest $27.5 million, besides the $18.4 million from offloading Block shares.
The move to offload all of its GBTC holdings is a strategic initiative rather than merely an undertaking to free funds for its Ark 21Shares Bitcoin ETF. While one cannot entirely rule out the latter, it appears to be a calculated move following talks between the fund managers and SEC.
Wood recently labelled the engagement a fruitful dialogue signaling the agency is edges closer to final stages of approving spot Bitcoin ETF.
The securities watchdog already set Friday, December 29, as the amendment filing deadline ahead of the anticipated decision date of January 10 2024.
Editorial credit: viewimage / Shutterstock.com
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