Cathie Wood, renowned fund manager and founder of ARK Investment Management has made a significant move in her Bitcoin-related holdings, opting to divest the ARK Next Generation Internet ETF from its remaining position in the Grayscale Bitcoin Trust. The decision was driven by uncertainty surrounding the Grayscale Trust’s potential conversion into an exchange-traded fund (ETF). Data compiled by Bloomberg indicates that the ARK Next Generation Internet ETF sold all of its 2.25 million shares in the Grayscale Bitcoin Trust and concurrently acquired 4.32 million shares of the ProShares Bitcoin Strategy ETF, which focuses on Bitcoin futures. This move positions the ARK ETF as the second-largest holder of the ProShares fund.
The reshuffling of holdings is occurring amidst a competitive race within the industry to secure US regulatory approval for the first ETF directly investing in Bitcoin. Cathie Wood cited caution as the primary motivation for the change, expressing concern about the Grayscale Trust’s potential failure to receive approval for its ETF conversion by US regulators in early January. This timeframe aligns with expectations for the Securities and Exchange Commission (SEC) to green-light the inaugural US spot-Bitcoin ETF.
Wood acknowledged positive developments such as the significant reduction in the Grayscale trust’s previous discount to its net asset value, coupled with its price increase. Despite optimism, she emphasized that approval is not guaranteed, pointing to the SEC’s Jan. 10 deadline to decide on various spot Bitcoin ETF applications.
ARK has been gradually reducing its exposure to the Grayscale Bitcoin Trust over recent months, despite Bitcoin’s rise to its highest level since April 2022. Bitcoin has more than doubled in value in 2023, with heightened speculation surrounding SEC approval for spot Bitcoin ETFs in the coming month.
Bitcoin experienced a 2.1% decline to $42,472.50, while the Grayscale Bitcoin Trust closed 4% lower.
Earlier in the week, Grayscale Investments announced the resignation of Barry Silbert, CEO of its parent company Digital Currency Group, amid legal disputes. Some saw this move as a positive step for Grayscale in gaining SEC approval for its fund’s conversion into an ETF.
Wood, who previously endorsed the Grayscale Bitcoin Trust as her top pick at the Sohn Australia conference, continues to express optimism about Bitcoin’s future while diversifying her approach.
On the same day, the ARK ETF made additional adjustments, purchasing 20,000 shares of the ARK 21Shares Active Bitcoin Futures Strategy ETF and selling 148,885 shares of cryptocurrency exchange Coinbase Global Inc.
Despite the volatility in its path, the ARK Next Generation Internet ETF has shown resilience, achieving a 103% gain for the year compared to the Nasdaq 100 Index’s 55% advance. However, the fund faced a notable 67% decline in 2022.
