Ark invest is buying shares of its new Bitcoin spot ETF.
After fully unloading the Grayscale Bitcoin Trust, it is now also unloading the Proshares ETF.
It is what Bloomberg analyst Katie Greifeld reports.
it begins
Ark sold $BITO to buy its own spot Bitcoin ETF $ARKB in its Next Generation Internet ETF today pic.twitter.com/5WYEj564C0
— Katie Greifeld (@kgreifeld) January 17, 2024
Ark’s Bitcoin ETFs
Ark Invest, by Cathie Wood, has created and manages several ETFs.
The company is famous above all for its actively managed ETFs, including the ARK Next Generation Internet ETF (ARKW).
In the past, this managed ETF had holdings of Grayscale Bitcoin Trust (GBTC) shares, but it has sold them as its own Bitcoin ETF launch approaches.
The fact is that part of those actions had been purchased when they had a strong discount on NAV, and were sold by ARKW when the discount had significantly reduced, resulting in a clear gain.
As of today, it appears that this Ark ETF has sold all the GBTC shares it had in its portfolio until just a few weeks ago.
By the way, they have also sold Coinbase shares, although this remains the main stock in ARKW’s portfolio with 8.6% of NAV.
The Bitcoin ETF
The ARK 21Shares Bitcoin ETF (ARKB) is instead a passive replication ETF. In other words, the entire NAV is composed only of BTC, and it will remain so forever.
ARKB is actually technically issued and managed by 21Shares, a Swiss company specialized in crypto ETFs, but the sponsor is indeed Ark.
This passive Bitcoin ETF is essentially the same thing as GBTC, now that even the Grayscale Bitcoin Trust has become an ETF, so the ARK Next Generation Internet ETF, which has liquidated all its GBTC shares, is now buying ARKB shares.
However, for now, ARKB’s purchases are still limited, as at a price per share of about $41, the 365,000 shares purchased by ARKW have a market value of about $15 million. The market value of the GBTC shares of the fund had reached much higher figures over time, and currently the COinbase shares owned by the fund are worth more than $130 million.
Note that ARKW also holds shares of another Bitcoin ETF, the ProShares Bitcoin Strategy ETF (BITO), and is also selling them. However, it has not yet liquidated all of them.
The market value of the ARKB shares purchased in these days corresponds more or less to that of the BITO shares sold, so it is a simple substitution that should not have any impact on the performance of the ETF.
Ark and Bitcoin
Cathie Wood was one of the first to bet on Bitcoin within traditional finance.
His Ark Invest has been in existence since 2014, and in December 2020 their Innovation ETF became the world’s largest actively managed ETF, with $17 billion in AUM.
The ARK Innovation ETF (ARKK) invests in stocks of technology companies, particularly in Coinbase, Tesla, Roku, Zoom, Block, etc.
Therefore, it is not an ETF directly linked to the crypto world, so much so that it began buying Coinbase shares only in 2021.
In other words, for the first seven years of life, he had nothing to do with the crypto market.
As of today, ARKK has a total NAV of over 9 billion dollars, of which 8.6% is made up of Coinbase shares, and 8% of Tesla shares.
Therefore, 2021 was the year when Ark Invest started to take an interest in the crypto world, and Cathie Wood had also started to take an interest in it before.
Cathie Wood has been bullish on BTC for years now, to the point of publicly stating that she believes it is possible for its price to eventually rise above one million dollars.
Active management ETFs
Passive replica ETFs, such as the ARK 21Shares Bitcoin ETF (ARKB), are simply funds that own one or more assets.
If they own only one asset, they simply replicate its price trend, while if they own more than one, the percentage allocation of the NAV among the various assets should remain fixed.
Instead, actively managed ETFs continuously modify their portfolio, in search of higher returns.
Those who purchase shares of a passive ETF are simply taking a position on the price of the assets held in the fund’s portfolio, while those who buy actively managed ETFs rely on the fund managers to generate returns.
Despite this, during the bear market of 2022, even Ark’s actively managed ETFs had negative performance, but over the years, positive performance still prevails.