ARK Invest's Strategic Gambit: Betting Big on Spot Bitcoin ETF's Potential

ARK Invest, the asset management firm founded and headed by American seasoned investor Cathie Wood, made a strategic move this week, underlining its confidence in its newly approved product– ARK 21 Bitcoin ETF (ARKB).

ARK Invest executed a strategic reallocation of its assets on Tuesday as it divested some of its holdings in ProShares Bitcoin Strategy ETF (BITO).

The firm sold a total of 757,664 BITO shares, with an approximate market value of $15.8 million and used the proceeds to acquire 365,427 shares of the Ark 21Shares Bitcoin ETF (ARKB), an equivalent investment of $15.8 million.

This move signifies a calculated shift in ARK Invest's cryptocurrency investment strategy, favoring ARKB over BITO in its portfolio composition.

It is worth noting that last month, ARK Invest liquidated its entire position in Grayscale Bitcoin Trust (GBTC) to support the potential launch of its Ark 21Shares Bitcoin exchange-traded fund (ETF).

Half of the proceeds from the GBTC sale, approximately worth $100 million, were used to purchase the BITO Bitcoin Futures ETF, making ARK Invest the second-biggest holder of BITO.

Bloomberg Intelligence ETF analyst Eric Balchunas, said at the time, that the ARK's investment in BITO may just be temporary and were acquired to be used as a liquidity bridge tool.

Balchunas and his fellow ETF analyst James Seyffart predicted ARK's selling off all of its GBTC position to fund its spot Bitcoin ETF ARKB.

"Ark's spot Bitcoin ETF will likely get a quick $130 million in cash as the firm sells its GBTC stake and instead uses its own ETF for exposure to the cryptocurrency," the ETF analysts said. "This potential bump in volume and flows might provide an early edge over rivals -- including BlackRock, whose ETF business is 184x the size of Ark's and a favorite in the spot Bitcoin race."

Apart from BITO, ARK Invest has been offloading massive Coinbase (COIN) shares to purchase other stocks like Tesla (TSLA) and Robinhood (HOOD).

Earlier this month, ARK Invest purchased over 105,000 shares of Tesla while simultaneously selling COIN shares worth over $25 million.

The sale of 166,183 Coinbase shares include 145,048 shares from ARK Innovation ETF (ARKK) and 21,135 shares from ARK Next Generation Internet ETF (ARKW).

Meanwhile, the launch of multiple spot Bitcoin ETFs in the U.S. did not propel the price of Bitcoin, the world's largest crypto asset by market capitalization, beyond the $50,000 price point.

As of 2:01 a.m. ET on Thursday, Bitcoin was trading at $42,835.36 with a 24-hour trading volume of $20,348,878,776.

The crypto asset's latest price action represents a 0.07% spike in its value on the day and a 7% loss over the last seven days.

Bitcoin's current circulating supply stands at 19,601,393 BTC and its market cap is at $839,621,113,435, data from CoinMarketCap shows.