Cathie Wood’s ARK Investment Management LLC is actively acquiring shares of its recently introduced spot Bitcoin ETF, intensifying the competition among the initial issuers.
The ARK Next Generation Internet ETF (ARKW) divested $16 million from its position in the futures-backed ProShares Bitcoin ETF (BITO) on Tuesday. This move was made to accommodate the purchase of 365,427 shares of the ARK 21 Shares Bitcoin ETF (ARKB), constituting 1% of the ARKW fund, as per data compiled by Bloomberg.
ARK Channeling Resources into ARKB
According to the reports, the latest move of reallocating funds from its sister fund to invest in ARKB positions it favorably amidst the fiercely competitive landscape of spot Bitcoin ETFs.
With the US Securities and Exchange Commission (SEC) allowing the simultaneous launch of 11 such ETFs last week, the absence of a first-mover advantage has transformed the scenario into a high-stakes race, considering all funds share the same underlying asset.
Channeling the company’s resources into its own ETF emerges as a swift method to achieve scale, a crucial factor for financial advisers and platforms, many of which impose minimum-asset thresholds, as per Bloomberg Intelligence.
Bloomberg Intelligence ETF analyst James Seyffart commented,
“Cathie Wood buying ARKB with her other ETFs is a little bit of a cheat code in raising assets and volume, but she’s not the only issuer that can do this and this isn’t the only cheat code available. We could see other issuers put their products in model portfolios or do standard bring-your-own-assets.”
Exiting GBTC Position
ARK Invest liquidated all its holdings in the Grayscale Bitcoin Trust (GBTC) in December, ahead of the latter’s transformation into a Bitcoin ETF. After exiting its position in GBTC, the company allocated nearly $100 million of its proceeds in BITO in anticipation of the approval of spot Bitcoin ETFs in the US.
It’s worth noting that this move was anticipated to be a temporary one. During this period, Cathie Wood emphasized the security of having an already approved fund over waiting for approval.