Cathie Wood's ARKW ETF Sells Grayscale Bitcoin Trust Holdings

In a move fueled by uncertainty, Cathie Wood's ARK Next Generation Internet ETF (ARKW) has sold all of its holdings in the Grayscale Bitcoin Trust (GBTC). The decision comes amidst questions surrounding whether the trust's conversion to an ETF will be approved.

According to the fund's daily updates, ARKW sold its remaining 2.25 million shares of GBTC on Wednesday. In exchange, the fund purchased 4.32 million shares of ProShares Bitcoin Strategy ETF (BITO), which is based on bitcoin futures.

This strategic shift precedes the looming January 10th deadline for a decision from the U.S. Securities and Exchange Commission (SEC) regarding ARK Investment Management and 21 Shares' spot bitcoin ETF application. Other bitcoin ETF applications from BlackRock, Fidelity, Invesco, VanEck, and more are also pending approval from the SEC.

While market participants anticipate the SEC's approval of ARK's bitcoin ETF and similar products by the deadline, Cathie Wood stated that ARKW sold its Grayscale holdings "out of an abundance of caution." The conversion's approval in early January remains uncertain. Wood expressed this sentiment in an interview with Bloomberg TV, saying, "It's just a moment of uncertainty between now and January 8th to 10th."

In August, a federal appeals court mandated the SEC to vacate its rejection of Grayscale's conversion into a bitcoin ETF.

ARKW Maintains Exposure to Bitcoin through BITO

As the market for spot bitcoin ETFs faces tax and regulatory uncertainties, ARKW has made the decision to maintain its exposure to bitcoin through BITO. According to CEO Cathie Wood, the approval process for bitcoin ETFs is still unclear, and it remains uncertain which applications will be approved and if they have met the SEC's criteria.

Although Grayscale's Barry Silbert recently resigned as chair without providing reasons, Wood remains positive about the future of bitcoin. She points to bitcoin's rally this year and the reduction in the gap between GBTC's price and its net asset value, which she considers to be "double good news" for ARK. The discount between GBTC's net asset value and its bitcoin holdings has narrowed from over 40% in June to around 6.9% currently.

While bitcoin has experienced a remarkable surge of more than 160% this year, it is still down nearly 40% from its peak in 2021, according to CoinDesk data.

In light of the potential approval of a spot bitcoin ETF, MicroStrategy recently acquired an additional 14,620 bitcoin for approximately $615.7 million. This purchase brings their total bitcoin holdings to around 189,150, as confirmed by CEO Michael Saylor.