In a significant reshuffle of its bitcoin (btc)-related holdings, Cathie Wood's ARK Next Generation Internet Exchange Traded Fund (ETF) has made strategic changes as btc ends the year with a significant increase of 156%.
According to a Bloomberg bitcoin-related-holdings” target=”_blank” rel=”nofollow”>reportThe ETF sold the remaining 2.25 million shares of Grayscale bitcoin Trust (GBTC) and acquired 4.32 million shares of the ProShares bitcoin Strategy ETF.
Caution as a reason to exit Grayscale bitcoin Trust
According to Bloomberg, Wood cited caution as the reason behind the sale of the bitcoin Trust in Grayscale. The move was prompted by concerns that the trust's planned conversion to a spot bitcoin ETF may not receive approval from US regulators in early January.
Furthermore, Wood highlighted the substantial reduction in the trust's discount to its net asset value, which, combined with its price increase, influenced the decision.
Wood emphasized the unpredictability around which bitcoin-related offerings would gain regulatory approval, expressing optimism about bitcoin and acknowledging the uncertainty ahead.
In this regard, Bloomberg ETF expert Erich Balchunas reflexes that approximately $100 million of the proceeds were used to purchase the ProShares bitcoin Strategy ETF (BITO), likely as a liquid transition vehicle to maintain exposure to bitcoin while gradually transitioning to ARKW or ARKB.
Interestingly, ARK has now become the second largest holder of BITO, although Balchunas clarifies that this is a temporary parking space. Blachunas emphasizes that institutions, including ARK, often employ highly liquid ETFs for transitions of this nature.
Balchunas also notes that this move aligns with the prediction made by Bloomberg a month ago, reflecting strategic foresight on ARK's part.
According to Balchunas, this decision is smart as it allows ARK to increase the assets under management (AUM) of its own ETF while preventing investors from incurring a significant expense ratio in the process.
Wood's long-term vision
According to the report, the reduction of Grayscale bitcoin Trust holdings has been a gradual process over cathie woodeven as the price of bitcoin rose to its highest level since April 2022.
Throughout 2023, bitcoin doubled in value, with significant gains occurring toward the end of the year amid speculation that the Securities and Exchange Commission (SECOND) would approve spot bitcoin ETFs in the first days of January 2024.
During the Sohn Australia conference last month, Wood touted Grayscale bitcoin Trust as his top pick. However, recent events have caused a change in the composition of the ETF's portfolio.
In addition to the changes involving Grayscale and ProShares, the ARK ETF also bought 20,000 shares of the ARK 21Shares Active bitcoin Futures Strategy ETF and sold 148,885 shares of the cryptocurrency exchange. Coinbase Globalaccording to the fund's report.
The ARK Next Generation Internet ETF has notched an impressive 103% gain for the year, outpacing the Nasdaq 100 index's 55% gain.
It should be noted that the fund's performance has been characterized by significant volatility, experiencing drops of 19% and 67% in 2021 and 2022, respectively.
The market-leading cryptocurrency is trading at $42,800, showing sideways price movement over the last 24 hours. During this period, there has been a marginal 0.3% decline in its value.
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