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Ark: Not afraid of GBTC's discount, only costs $250 to buy Coinbase-related securities

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Ark: Not afraid of GBTC

Ark Invest founder Cathie Wood discussed in a Bloomberg interview the decision to sell a significant portion of their Coinbase holdings near historic lows. She expressed concerns over multiple tokens on the platform being labeled as unregistered securities by the U.S. Securities and Exchange Commission. In light of regulatory uncertainties, she believed that divesting some of the holdings seemed like the more advantageous choice.

Macroeconomics

The host asked about predictions for the Federal Reserve's interest rate hikes or cuts. Cathie Wood mentioned the following:

  1. The U.S. economy is entering a recession dominated by a supply chain crisis.
  2. Although the July non-farm payroll index grew by nearly 530,000, exceeding expectations, more comprehensive U.S. employment reports either remained flat or showed a downward trend.
  3. Expectations of slowing job growth suggest that the Federal Reserve will begin cutting rates in 2023.
  4. The Fed's continued liquidity tightening will lead to rising interest rates and continued decline in commodities.

Sale of COIN Not Due to Insider Trading

On 7/26, Ark sold approximately 1.41 million shares of Coinbase stock, ticker symbol COIN, at a closing price of around $53, totaling about $75 million.

However, according to the fund's top ten holdings data, Ark still holds over $451 million worth of COIN, ranking eighth in all holdings, accounting for about 4.48% of Ark's portfolio, and remains the third-largest shareholder of Coinbase with 8.95 million shares.

When questioned, Cathie Wood stated:

"We did not sell due to insider trading at Coinbase, but because the SEC accused nine tokens of being unregistered securities, which introduces some uncertainties. How many tokens will Coinbase need to delist? Or how will registering with the SEC change Coinbase's business model?"

She emphasized that on the day of the sale, market volatility was high, with Shopify also dropping by 15%, while the sold COIN represented only a small portion of Ark's holdings.

GBTC

The host expressed concerns about GBTC's high discount, questioning why not opt for directly holding Bitcoin futures ETF "BITO" or MicroStrategy stock as a Bitcoin alternative?

Cathie Wood responded:

We have held GBTC since as early as 2015, so you know our cost basis is very low, around $250. Ark will continue to hold GBTC. We do not believe it can be replaced by products like BITO or MicroStrategy stock. We want to hold the most basic form of Bitcoin.