KEY POINTS
- ARK Invest is now the second-largest BITO holder
- The investment fund no longer holds any GBTC
- Last week, ARK 21Shares Bitcoin ETF filed an amended application with the SEC
ARK Invest has reportedly liquidated its entire position in Grayscale Bitcoin Trust (GBTC) to support the potential launch of its Ark 21Shares Bitcoin exchange-traded fund (ETF) ahead of the U.S. Securities and Exchange Commission's (SEC) Jan. 10 deadline for approval of the spot Bitcoin ETF.
Cathie Wood's investment fund is collaborating with 21Shares on Bitcoin and Ethereum Futures ETF products and its ARK 21 Shares Bitcoin ETF is among the first proposal subject to SEC's final decision on Jan. 10.
ARK Invest has been offloading its GBTC position over the past weeks, but on Wednesday, Bloomberg Intelligence senior ETF analyst Eric Balchunas revealed the firm sold off all of its GBTC holdings.
Half of the proceeds from the GBTC sale, approximately worth $100 million, were used to purchase the BITO Bitcoin Futures ETF, which Balchunas speculated was made to be used as a liquidity bridge tool.
"Today ARK sold its entire remaining $GBTC position (it was ARKW's biggest holding only a month ago) and used half the money $100m-ish to buy $BITO, likely as liq transition tool to keep beta to btc while it legs into $ARKW or $ARKB. End of an era," Balchunas said in a tweet.
Today ARK sold its entire remaining $GBTC position (it was ARKW's biggest holding only a month ago) and used half the money $100m-ish to buy $BITO, likely as liq transition tool to keep beta to btc while it legs into $ARKW or $ARKB. End of an era. h/t @DilksJay @funwithnumberz pic.twitter.com/J1i92qcmzo
— Eric Balchunas (@EricBalchunas) December 28, 2023
The said purchase makes ARK Invest the second-biggest holder of BITO although the ETF analyst thinks that the holdings may just be temporary.
"Just like that ARK is now the second biggest holder of $BITO, altho again this is a temporary parking spot. They (and institutions generally) use highly liq ETFs for transitions like this," the analyst said in a follow-up tweet.
Just like that ARK is now the second biggest holder of $BITO, altho again this is a temporary parking spot. They (and institutions generally) use highly liq ETFs for transitions like this. pic.twitter.com/OKSVzL16gA
— Eric Balchunas (@EricBalchunas) December 28, 2023
Analysts at Bloomberg Intelligence predicted this move a month ago.
Last month, Balchunas and another ETF analyst, James Seyffart, said, "Ark's spot Bitcoin ETF will likely get a quick $130 million in cash as the firm sells its GBTC stake and instead uses its own ETF for exposure to the cryptocurrency," adding that "This potential bump in volume and flows might provide an early edge over rivals -- including BlackRock, whose ETF business is 184x the size of Ark's and a favorite in the spot Bitcoin race."
Moreover, the analysts explained that if this happened, the ARK 21 Shares Bitcoin ETF could have an early lead in the spot Bitcoin ETF race because of the hundreds of millions of dollars injected into the fund, which could come in portions.
"The ARK 21 Shares Bitcoin ETF (ARK) could jump out to an early lead in the upcoming spot Bitcoin ETF race due to a likely injection of $130 million from Ark's replacement of GBTC exposure. This influx of flows and volume might come in chunks, which could even be better for RCB, since it would help make it look as though the ETF was attracting consistent interest in the first week," the analysts said at the time.
We predicted they'd do this a month ago.. smart imo, better to give your own ETF a nice aum boost while saving your investors on a big ann big exp ratio pic.twitter.com/YlBvKDS2dk
— Eric Balchunas (@EricBalchunas) December 28, 2023
Last week, ARK 21Shares Bitcoin ETF filed an amended application with the SEC noting that its crypto investment vehicle will use the cash creation and redemption model. The ARK 21Shares Bitcoin ETF proposal initially preferred the in-kind creation and redemptions model.
