Cathie Wood’s ARK Invest Sells Grayscale Bitcoin Trust Shares, Yet GBTC Still Tops ARKW Holdings

As the gap between traditional finance and the cryptocurrency sector continues to close, one of the first companies in this space – Cathie Wood’s ARK – has sold a significant portion of its Grayscale Bitcoin Trust (GBTC) shares. The investment manager sold approximately 200,000 shares, worth US$ 5.8 million (AU$ 9.1 million) last week, amid a strong month for Bitcoin’s price.

GBTC Still Dominates ARKW Portfolio

Although Cathie Wood’s firm lessened its exposure to GBTC, the futures-based Bitcoin ETF is still the leading asset in Ark’s Next Generation Investment Fund. GBTC comprises about 9.97% of the fund’s net asset value (NAV), barely scraping ahead of Coinbase Global (9.56%) and smart home company Roku (9.03%). All up, ARKW’s total holdings are valued at over US$ 1.2 billion (AU$ 1.9 billion) and the fund has enjoyed a stellar 2023, up 34% since January 1st. 

The ARKW fund intends to provide investors exposure to leading technological companies, particularly those working toward the next generation of the internet. Naturally, public Web3 companies and crypto assets feature heavily, alongside well-known products such as Tesla, DraftKings and Zoom.

Ark Invest Set to Collaborate on Futures ETFs

It’s possible ARKW relinquished some of its GBTC holdings as the company plans to release five funds in the coming weeks, in conjunction with crypto-based investment firm 21Shares. The two companies jointly applied for these funds in August, and it appears that it’s only a matter of days before the public can start investing.

Each of the five funds relies on futures contracts – an agreement to buy or sell an asset at a later date at a pre-specified price – rather than actually owning the underlying cryptocurrency. Although the mechanisms and exposures of each fund will be slightly different, they will essentially try to track the price movements of Bitcoin and Ethereum. 

I don’t expect a lot of interest in these products, especially given the timing of the launch. Investors are eagerly waiting for spot ETFs, and the response to ether futures ETFs has been tepid.

Neena Mishra, Director of ETF research, Zacks Investment Research

Using a unique blend of futures contracts, the company even plans to use “historical pricing relationships and fundamental analysis to outperform holding Bitcoin over a market cycle”. Over the past decade, BTC has been one of the best-performing assets in any market, so whether Ark and 21Shares can beat the seminal cryptocurrency will make for an interesting spectacle.