Cathie Wood’s asset management firm ARK Invest’s Next Generation Internet ETF (ARKW) sold all its positions in Grayscale’s Bitcoin Trust (GBTC) on Dec. 27 and purchased $92 million worth of ProShares Bitcoin Strategy ETF (BITO), according to the company’s latest trade filing.
ARK divesting positions in COIN and GBTC
The trading activity continues a recent selling spree that has impacted several Bitcoin-related holdings, including Coinbase’s COIN stock, as ARK tries to rebalance its fund weightings.
In November, the fund divested more than 700,000 units of GBTC holding despite the rising value of the shares due to the market optimism surrounding the possible approval of a spot Bitcoin (BTC) exchange-traded fund (ETF) in the U.S. At the time, GBTC represented more than 9% of ARKW’s portfolio.
Additionally, the firm has sold over $200 million worth of Coinbase stock this month, dumping around 500,000 units of COIN stocks during the past week alone.
COIN is one of the best-performing stocks of the past year, up more than 400% on the year-to-date metric, according to Tradingview data.
‘Temporary’ BITO purchase
Meanwhile, the firm’s purchase of BITO shares makes it the second-largest holder of the fund. However, this purchase is surprising, considering its BTC spot ETF application is currently under review.
Eric Balchunas, a senior ETF analyst for Bloomberg, explained that ARK’s purchase of BITO shares was likely a “liquidity transition tool” to retain “high beta” with Bitcoin. He said:
“ARK is now the second biggest holder of BITO, although again this is a temporary parking spot. They (and institutions generally) use highly liquid ETFs for transitions like this.”
Additionally, Balchunas pointed out that the move would help to enhance the ETFs’ assets under management (AUM) and potentially offer advantages to their investors by improving expense ratios.
BITO is ARKW’s sixth-largest holding, ahead of electric car giant Tesla and crypto investment platform Robinhood.