ARK Invest Sells GBTC Shares but Remains Confident in Bitcoin’s Long-Term Potential

• Cathie Wood, CEO of ARK Invest, clarified that the decision to sell GBTC shares was driven by caution and profit potential, not a loss of confidence in Bitcoin.

• Wood remains optimistic about Bitcoin, expressing confidence in the SEC’s approval of a spot Bitcoin ETF, which faces a January 10 deadline for a decision.

ARK Invest’s exchange-traded fund, the ARK Next Generation Internet ETF, has divested 2.25 million shares from the Grayscale Bitcoin Trust (GBTC). In the same move, the fund acquired 4.32 million shares of the ProShares Bitcoin Strategy ETF (BITO) and 20,000 shares of the ARK 21Shares Active Bitcoin Futures Strategy ETF (ARKA).

Cathie Wood, the CEO of ARK Invest, explained that the decision to sell GBTC shares was made “out of an abundance of caution,” anticipating that the US Securities and Exchange Commission (SEC) might not approve the ARK 21Shares Bitcoin ETF in January 2024. The profit potential from the narrowing of GBTC shares to the net value of the underlying Bitcoin per share also influenced the sale.

However, Wood clarified that her sale of GBTC shares doesn’t mean a loss of confidence in Bitcoin. “We’re as optimistic about Bitcoin as we’ve ever been,” she affirmed.

In a CNBC interview earlier this year, Wood expressed her belief that Bitcoin would outperform stocks related to cryptocurrencies over the long term. Meanwhile, ARK Invest is exploring various products, including those investing in Bitcoin futures like the ProShares ETF, Ethereum futures, Bitcoin futures and cash, Ethereum futures, and cash, and companies actively involved in Bitcoin investments. The company is currently awaiting a decision from the SEC regarding the success of its exchange-traded fund application.

Ark Invest Exercises Caution

The ARK Next Generation Internet ETF offloaded its remaining 2.25 million Grayscale Bitcoin Trust shares and acquired 4.32 million ProShares Bitcoin Strategy ETF shares on the same day, becoming the second-largest holder of the latter.

The rearrangement of holdings occurs as various entities vie for regulatory approval in the United States for the inaugural ETF directly investing in the largest cryptocurrency. Wood also explained to Bloomberg Television that the decision was a precautionary measure, anticipating that the conversion of the Grayscale trust into an ETF might not receive approval from US regulators in early January. This timeframe also aligns with widespread expectations for the Securities and Exchange Commission to authorize the first US spot-Bitcoin ETF.

Additionally, Wood also expressed confidence in the approval of the spot Bitcoin ETF by the U.S. SEC. She added:

We think the probabilities have gone up because the SEC has been highly engaged compared to what was happening before”. Nevertheless, she cautioned that an approval is “not 100% certain. We don’t know exactly who’s going to be approved and whether they’ve met all the criteria that the SEC has put before us,” she said. “We’re as optimistic about Bitcoin as we’ve ever been.

The Securities and Exchange Commission (SEC) confronts a January 10 deadline to determine the approval of a spot Bitcoin ETF application submitted by ARK Investment Management LLC, led by Wood, and 21Shares, along with potentially other comparable filings.

As we come to bid adieu to 2023, Bitcoin (BTC) is facing a bit of selling pressure. Also, at press time, Bitcoin is trading 2.4% down at $41,627 with a market cap of $815 billion.