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The end of the Grayscale era? Ark liquidates all GBTC, switches to buying BITO

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The end of the Grayscale era? Ark liquidates all GBTC, switches to buying BITO

According to a post by Bloomberg ETF analyst Eric Balchunas, Ark Invest's fund ARKW has liquidated all its GBTC holdings and switched to ProShares' Bitcoin futures ETF BITO. Ark has become the second largest holder of BITO, marking the end of the Grayscale era and paving the way for its upcoming Bitcoin spot ETF ARKB.

Sell GBTC, Buy BITO to Maintain Bitcoin Beta Coefficient

Last week, Eric Balchunas analyzed the stock holdings of Ark Invest's ARKW fund and found that Ark had recently increased the weighting of Coinbase stock symbol COIN while decreasing the proportion of Grayscale Bitcoin Trust GBTC. Typically, GBTC accounts for 9-11% of their fund's weightings, but it dropped to 5.5% last week.

At that time, he speculated:

Beta coefficient is an indicator that measures the systematic risk of a product or investment portfolio, used to evaluate the comparison of the financial product or investment portfolio with the overall market volatility. If Ark wants to maintain the exposure ratio of Bitcoin in its fund but does not want to hold GBTC, they can buy other Bitcoin-related stocks like Coinbase to maintain their Beta coefficient. Similarly, Ark can also choose to hold Bitcoin futures BITO as an alternative.

BITO had record high trading volume last week, confirming the market for a Bitcoin ETF!

Away from GBTC, paving the way for ARKB?

Bloomberg had previously reported a month ago that Ark would sell GBTC to raise $130 million in cash to pave the way for its Bitcoin spot ETF ARKB.

Cathie Wood, the founder of Ark, recently praised the increased knowledge of the SEC in an interview, believing that approval for a Bitcoin spot ETF before January 10 next year is highly likely. She also added that she hopes ARKB will also pass at that time.

However, according to the latest data on the Ark website, GBTC still accounts for 4.28% of ARKW's weightings, and the name of BITO does not appear in their holdings. Could it be that Bloomberg's data is too advanced? When faced with inquiries from netizens, Balchunas expressed confusion about the discrepancies between Ark and Bloomberg data, but he believes that logically, Ark moving away from GBTC is not wrong.

Cathie Wood mentions the uncertainty of taxation and regulation in GBTC

12/29 Update

Cathie Wood mentioned the reason for Ark selling GBTC on BBTV in a tweet by Eric Balchunas:

GBTC has uncertainties in terms of taxation and regulation. Also, its discount has significantly narrowed, which is a double benefit for us.

She also added "We don't know who will get approval, but we know we have met the standards."

And the recent holdings update on the Ark website shows that they no longer hold GBTC and have purchased $92.07 million worth of BITO.