Coinbase and GBTC Sales Mark New Investment Chapter for Ark Invest Amidst ETF Buzz

Ark Invest, under the leadership of Cathie Wood, has recently shifted its investment strategy, notably divesting from the Grayscale Bitcoin Trust (GBTC) and a substantial portion of Coinbase shares. The firm liquidated approximately $45 million in GBTC shares and over $150 million in Coinbase shares earlier this month. As of press time, the firm has sold all of its GBTC holdings.

The strategic move comes ahead of the potential approval of a novel Bitcoin investment product by the U.S. Securities and Exchange Commission (SEC), which is expected by January 10, 2024. The announcement was made public on social media platform X by Bloomberg analyst Eric Balchunas.

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

Ark Invest used roughly $100 million, half the proceeds from the GBTC sales, to buy into the Bitcoin Futures ETF BITO. Additionally, the firm’s ARK Next Generation Internet ETF (ARKW) offloaded 148,885 Coinbase shares valued at $27.5 million. Moreover, through its Innovation ETF (ARKK), Ark Invest has sold more than 1.5 million shares of Coinbase this month.

Despite these sales, Coinbase remains a significant component of ARKK’s portfolio, constituting 10.7% of its total investments. The firm has also adjusted its holdings in Coinbase across its ARKW and ARKF funds to approximately 12% and 14%, respectively.

The decision-making at Ark Invest has been notably influenced by the performance of Coinbase’s stock, which has seen a dramatic increase. The stock is currently trading at around $184, marking a 54% rise from the previous month and a 449% increase since the beginning of the year.

Further expanding its investment horizon, on December 18, Ark Invest acquired $25.7 million worth of Block Inc (SQ) stock through the ARK Next Generation Internet ETF (ARKW). This was in line with the firm’s continued interest in innovative financial technology firms.

The reallocation of GBTC had already started earlier this month. ARKW had sold 2,118,186 GBTC shares, reducing its fund’s exposure to about 4.3% in GBTC, valued at approximately $77 million at the time of sale. GBTC, established in 2013 and managing around $26 billion in assets, is currently awaiting approval from the SEC to transition into an ETF.