Ark Invest Offloads GBTC Shares As Bitcoin Spot ETF Brews On Horizon

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Dec 28

As the much-awaited deadline for Bitcoin Spot ETF applications is drawing near, Ark Investment Management under the direction of Cathie Wood has sold off its entire Grayscale Bitcoin Trust (GBTC) holdings.

Ark Invest Bitcoin Investment Strategy Shift

Bloomberg Intelligence ETF analyst Eric Balchunas recently reported the development on X (formerly Twitter) on Thursday, December 28. According to him, this strategic move came within a month after Grayscale Bitcoin Trust (GBTC) became ARKW's largest holding.

Ark Invest selling off its entire GBTC might be due to the anticipation of the Bitcoin Spot Exchange-Traded Fund (ETF) approval before the deadline on January 10, 2024.

The Bloomberg analyst also pointed out that Ark Invest used half of the money valued at $100 million to purchase BITO, the ProShares Bitcoin Strategy ETF. This move to the BITO – ProShares ETF, which was introduced in October 2021, signifies a pivotal change to its investment approach.

Balchunas noted that the shift is likely a part of the firm's plan to utilize BITO as a liquid transition tool. This will maintain beta for Bitcoin before ARK Next Generation Internet ETF ($ARKW) and ARK 21Shares Bitcoin spot ETF ($ARKB) are launched.

With the investment in BITO, Ark Invest has risen to the position of the second largest owner of Proshares Bitcoin Strategy ETF shares. However, the Bloomberg analyst has pointed out that "this is a temporary parking spot."

Furthermore, Balchunas highlighted how institutional investors often carry out these kinds of transitions. "They (and institutions generally) use highly liq ETFs for transitions like this," he stated.

The analyst also noted that the predictions that were made a month ago have been realized. He emphasized that in addition to being strategic, this action is also meant to increase the assets under management (AUM) of their ETFS.

As a result of this, their investors will potentially benefit from their investments by optimizing expense ratios. "Better to give your own ETF a nice aum boost while saving your investors on a big ann big exp ratio," he stated.

Grayscale's Adjustments To Its BTC Spot ETF Filing

Grayscale, one of the largest asset management companies has submitted an updated S-3 for its Bitcoin spot ETF. James Seyffart, a Bloomberg analyst shared the information with the crypto community on X

The asset management firm filed the updated document on December 26, with the United States Securities and Exchange Commission (SEC). In the updated filing, Grayscale will now only take cash orders for its ETF investments, while implementing the cash-only policy.

The filing read:

At this time an Authorized Participant can only submit Cash Orders, pursuant to which the Authorized Participants will deposit cash into, or accept cash from the Cash Account in connection with the creation and redemption of Baskets.

So far, this move was made by the firm to maintain its leadership in the BTC spot ETF race.