Cathie Wood and her ARK Invest asset management company have made some major changes to the firm's cryptocurrency-related holdings as crypto stocks continue to rally on expectations of spot bitcoin ETF approvals by regulators.
ARK Invest on Wednesday purchased nearly 4.31 million shares of the ProShares Bitcoin Strategy ETF for the ARK Next Generation Internet ETF. The stake is worth $92.08 million based on Wednesday's closing price of 21.31, according to daily trade updates from the firm.
Launched in October 2021, the ProShares Bitcoin Strategy ETF is the first U.S. bitcoin-linked ETF. It's also the largest based on assets under management as of Sept. 30, according to Bloomberg data.
BITO invests in bitcoin futures contracts and does not offer direct exposure to the cryptocurrency. That's unlike the current spot bitcoin ETF applications under review by the Securities and Exchange Commission.
ARK's BITO holdings represent 5.03% of the ARKW ETF. Further, that makes it the sixth-largest position in the fund as of Thursday.
Meanwhile, ARK Invest unloaded all of its Grayscale Bitcoin Trust holdings from ARKW Wednesday and appeared to use half the proceeds to buy BITO, Bloomberg reported. GBTC is under review by the SEC to convert to a spot bitcoin ETF. It was ARKW's largest holding a month ago.
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Senior Bloomberg ETF analyst Eric Balchunas believes it's likely a transition strategy.
"Just like that 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," Balchunas posted on X.
The ETF also added 20,000 shares of ARK 21Shares Active Bitcoin Futures Strategy ETF, which invests in bitcoin futures contracts.
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Meanwhile, ARKW also sold 148,885 shares of Coinbase stock worth nearly $27.58 million Wednesday, at a closing price of 185.24. Cathie Wood and ARK Invest have sold sizable portions of the firm's Coinbase holdings in December as shares of the crypto exchange spiked nearly 49% during the month, MarketSmith data shows.
Still, Coinbase remains the top holding in ARKW, representing 11.67% of the total fund as of Dec. 28.
Other major ARKW sales on Wednesday included unloading 231,102 shares of Block and 281,284 shares of UiPath, respectively. Block was ARKW's second-largest holding at 8.55% of the fund with UiPath as the fifth-largest with 5.3%.
Bitcoin, Crypto Rally
Cryptocurrency prices and related stocks have soared over the past few months. Traders expect the SEC will approve a wave of spot bitcoin ETF applications in early January. Doing so allows institutional investors to participate in the crypto market and offers exposure to their customers.
Meanwhile, bitcoin is trading at 20-month highs around $43,000, surging from $27,000 at the end of September. The world's largest cryptocurrency rebounded 158% in 2023.
Despite the Cathie Wood and ARK Invest sell-off, Coinbase stock has vaulted nearly 62% from a cup base breakout in late November. It also has gained 423.4% this year through Wednesday's close. Also, GBTC rallied 66% from a mid-October breakout and spiked 337% in 2023.
Further, bitcoin miner Marathon Digital rocketed 160% over the past month and has catapulted more than 800% this year through Wednesday.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
