Cathie Wood’s ARK Invest Waves Goodbye to Grayscale in $200 Million Exit

ARK Invest – the institutional asset management firm led by Cathie Wood – made a significant move by liquidating all of its remaining holdings in the Grayscale Bitcoin Trust (GBTC), totaling $200 million.

In the previous month, GBTC stood as the largest holding in ARK’s Next Generation Internet ETF. However, the asset management firm has now completely exited this position.

The adjustment in the portfolio comes ahead of the anticipated decision by the Securities and Exchange Commission (SEC) next month regarding the approval of trading spot Bitcoin ETFs in the United States.

Bitcoin Futures ETF: ‘Temporary Parking Spot’ for ARK?

Bloomberg ETF analyst Eric Balchunas revealed that ARK Invest used half of the proceeds, approximately $100 million, to invest in the ProShares Bitcoin Strategy ETF (BITO). However, the analyst speculated that this move is a temporary one, serving as a strategic pause while the Florida-based fund manager seeks a more liquidity-rich portfolio.

According to Balchunas, ARK appears to be using the futures Bitcoin ETF as a “temporary parking spot” while preparing to launch its own spot Bitcoin ETF next year, pending approval from the SEC.

Today ARK sold its entire remaining $GBTC position (it was ARKW’s biggest holding only a month ago) and used half the money $100m-ish to buy $BITO, likely as liq transition tool to keep beta to btc while it legs into $ARKW or $ARKB. End of an era. h/t @DilksJay @funwithnumberz pic.twitter.com/J1i92qcmzo

— Eric Balchunas (@EricBalchunas) December 28, 2023

This decision to completely dump Grayscale holdings follows ARK Invest’s gradual divestment, which started in October when Bitcoin reached $34,000. At that time, the investment firm sold 100,739 GBTC shares worth $2.5 million from its ARK Next Generation Internet ETF (ARKW).

In a more recent transaction on December 19, ARK Invest offloaded an additional 809,441 GBTC shares, amounting to $27.9 million.

Beyond 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 strategic repositioning aligns with the broader context of anticipation and speculation surrounding the potential approval of a spot Bitcoin ETF.

Notably, the latest move has propelled ARK Invest to become the second-largest holder of the Bito ETF.

Grayscale’s Strategic Moves Ahead of Bitcoin ETF Verdict

During the final week of the year, Barry Silbert and Mark Murphy resigned from Grayscale Bitcoin Trust’s parent company, Grayscale Investments, in what 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 its GBTC into a spot Bitcoin ETF on the same day, complying with the SEC’s demands for cash-only creation for the 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 securities regulator had rejected the application, along with several 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.

Should the SEC grant approval for Bitcoin ETFs, Grayscale will be facing off against established players such as Fidelity, BlackRock, and Ark Invest.