ARK Invest CEO Cathie Wood recently made a significant move by selling all of the company’s remaining Grayscale Bitcoin Trust (GBTC) holdings just before the end of 2023. The firm’s Next Generation Internet Fund (ARKW) sold 2.25 million shares of GBTC and used some of those holdings to purchase 4.32 million shares of the ProShares Bitcoin Strategy ETF (BITO).
While both GBTC and BITO track the price of Bitcoin with futures, GBTC differs slightly from BITO in terms of its relationship with spot Bitcoin exchange-traded funds (ETFs). Grayscale indicated in its filings with the Securities and Exchange Commission (SEC) that it would convert the futures-linked version of GBTC into a spot version of GBTC if its application is approved, which happened on Jan. 10. This conversion allows it to maintain the same investment and ticker symbol while changing the underlying asset from Bitcoin futures into actual Bitcoins.
The move from ARK has caused some investors to question Grayscale’s plans. Some speculate that ARK may be wary of GBTC’s ability to convert from a futures ETF into a spot ETF, which could lead to investors shifting their capital from GBTC to other Bitcoin ETFs if approvals are granted. This could potentially cause GBTC to lose value.
Wood stated in an interview with Bloomberg Television that the trade was made “out of an abundance of caution,” as ARK is not completely certain that GBTC will be approved for the conversion. Additional caution may also stem from recent changes within Grayscale’s parent company Digital Currency Group (DCG), as the founder and CEO resigned in late December amidst legal issues.
While ARK sold GBTC, it also purchased BITO, possibly indicating a bullish stance on Bitcoin. The move to buy BITO could also be driven by ETF mandates requiring a certain amount of the fund to be invested in crypto-related products. The SEC approved spot Bitcoin ETFs on Jan. 10, marking the final decision date for ARK and 21Shares ETF application after several delays.
Overall, the decision to sell GBTC and buy BITO reflects ARK’s cautious approach and strategic positioning in the evolving landscape of Bitcoin investments.