ARK Invest Exits Grayscale Bitcoin Trust Holdings, Positioning for Spot Bitcoin ETF

ARK Invest Exits Grayscale Bitcoin Trust Holdings, Positioning for Spot Bitcoin ETF

ARK Invest, the institutional asset management firm led by Cathie Wood, has made a significant move by liquidating all of its remaining holdings in the Grayscale Bitcoin Trust (GBTC), totaling $200 million. This decision comes ahead of the anticipated SEC decision regarding the approval of trading spot Bitcoin ETFs in the United States.

ARK Invest has divested its GBTC holdings and redirected $100 million to invest in the ProShares Bitcoin Strategy ETF (BITO). This move is seen as a temporary one, as ARK Invest seeks a more liquidity-rich portfolio. Bloomberg ETF analyst Eric Balchunas suggests that ARK Invest is using the futures Bitcoin ETF as a “temporary parking spot” while preparing to launch its own spot Bitcoin ETF next year, pending SEC approval.

This latest decision from ARK Invest to completely sell off its Grayscale holdings follows a gradual divestment process that began in October. At that time, the investment firm sold 100,739 GBTC shares worth $2.5 million. In a more recent transaction on December 19, ARK Invest offloaded an additional 809,441 GBTC shares, amounting to $27.9 million. This strategic repositioning aligns with the broader anticipation and speculation surrounding the potential approval of a spot Bitcoin ETF.

In addition to parting ways with GBTC, ARK Invest also divested 148,885 Coinbase shares valued at $27.5 million from its ARK Next Generation Internet ETF (ARKW). This shift in holdings indicates ARK Invest’s focus on optimizing its portfolio for potential spot Bitcoin ETF opportunities.

ARK Invest’s move to invest in the ProShares Bitcoin Strategy ETF (BITO) has propelled the firm to become the second-largest holder of this ETF. This move showcases ARK Invest’s strategic positioning within the evolving landscape of cryptocurrency investments.

During the final week of the year, Barry Silbert and Mark Murphy resigned from Grayscale Bitcoin Trust’s parent company, Grayscale Investments. This move was widely interpreted as a display of compliance ahead of the potential approval of a Bitcoin ETF. The asset manager subsequently amended its S-3 filing for the conversion of GBTC into a spot Bitcoin ETF on the same day, meeting the SEC’s demands for cash-only creation for fund redemptions.

While the Grayscale Trust currently operates as a closed-end fund, the company sought to convert it into an ETF in 2021. The SEC initially rejected the application, along with other proposals for spot offerings from crypto-focused firms. However, in September, a court determined that the SEC had made an error in its denial and mandated a reassessment of Grayscale’s application. If approved, Grayscale will be competing against established players such as Fidelity, BlackRock, and ARK Invest in the Bitcoin ETF market.

ARK Invest’s decision to liquidate its Grayscale Bitcoin Trust holdings and shift its focus to the ProShares Bitcoin Strategy ETF indicates a strategic move to position itself for potential opportunities in the spot Bitcoin ETF market. With the anticipated SEC decision on the horizon, ARK Invest aims to optimize its portfolio for maximum liquidity and potential returns. This shift in strategy aligns with the broader trend of institutional investors embracing the evolving cryptocurrency landscape.


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