Ark Invest exits GBTC ahead of potential bitcoin ETF

Cathie Wood’s Ark Invest is buying up shares of the ProShares bitcoin strategy ETF (BITO).

ARK’s Next Generation Internet ETF, which previously held a large amount of Grayscale bitcoin trust, also exited out of its position according to its holdings.

Bloomberg Intelligence analyst Eric Balchunas said that the move is likely because it’s using the money from GBTC as a “[liquid] transition tool to keep beta to [bitcoin] while it legs into ARKW or ARKB.”

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Balchunas noted that this move wasn’t a surprise, and in his opinion was “smart.”

“Better to give your own ETF a nice [assets under management] boost,” he said.

The move was addressed by Cathie Wood, CEO of Ark Invest, in an interview with Bloomberg TV where she said that the move to exit GBTC and enter BITO was made “out of an abundance of caution.”

“BITO…is already approved, there’s no regulatory uncertainty having to do with it, so we chose to maintain our exposure through BITO for the time being,” Wood said.

“There are some tax and regulatory uncertainties still, as part of this process…we don’t know exactly who’s going to be approved and whether they’ve met all of the criteria that the SEC has put before us. We know that we have, but we don’t know if others — including GBTC have. We just don’t know,” she continued.

As Balchunas said, and Blockworks previously reported, analysts believed that Ark would choose to sell its current GBTC position to move assets over to its bitcoin ETF. According to filings, the ETF — if it gets approved — would trade under the ticker ARKB as the Ark 21Shares Bitcoin ETF.

The SEC has a deadline of Jan. 10 to rule on the bitcoin ETF. Bloomberg’s James Seyffart believes that multiple decisions could be handed down — if the SEC is keen on giving the firms a green light — the week of Jan. 10.

As far as possible SEC approvals go, “we think the probabilities have gone up,” Wood said in the interview.

“The SEC has been highly engaged,” she added.

However, it’s not a done deal yet.

“This is the SEC and we never know what might happen along the way,” she continued.

Additionally, ARKW sold more Coinbase, continuing a selling spree that’s been happening for a number of weeks. So far this month, Ark sold nearly 3.7 million shares of both Coinbase and GBTC. Roughly 1.5 million of those shares are Coinbase, while the asset manager sold over 2 million of GBTC, which helped to fully exit its position.

Both Ark Invest and Grayscale are aiming to launch bitcoin ETFs, though both have different approaches. Grayscale is trying to convert GBTC to a bitcoin ETF.

Earlier this year, a court sided with Grayscale, giving the firm a win over the Securities and Exchange Commission. The win meant that the SEC had to re-evaluate Grayscale’s proposed GBTC conversion into an ETF after the regulatory agency denied the initial application.

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