ARK Selling GBTC Holdings Does Not Really Mean It Is Bullish On Bitcoin, ETF Analyst Says

Cathie Wood's ARK Invest recently sold 700,000 shares and then proceeded to sell approximately 164,000 shares of Grayscale Bitcoin Trust (GBTC) last week. Following the sale of shares, many speculated that the company was bullish on Bitcoin, but a senior ETF analyst explained the reason behind the move.

Last week, American investment management firm ARK Invest sold more GBTC shares, specifically 163,722, to earn $5.02 million.

According to senior Bloomberg ETF analyst Eric Balchunas, the move does not necessarily mean that ARK is bullish on Bitcoin or that the company is making room for ARKB, its Bitcoin exchange-traded fund (ETF), but rather that it is maintaining its strategic investment position.

"Just saw another article on how ARK is selling GBTC and how that means they aren't really bullish btc and/or they making room for ARKB. Neither is true. With ARK you gotta look at weightings history bf you begin your interpretation. FYI," Balchunas said in a post on X on Monday.

For the ETF analyst, the series of GBTC shares' sales intended to uphold the desired weight of the investment option of ARK Invest.

Considering that GBTC witnessed a significant surge of 76% since August, ARK needed to offload a substantial number of shares to maintain its allocation cap, which is floating at around 9%.

"Not defending ARK's btc predictions, but re its portfolio they like to sell winners (and vice-versa) to maintain desired weightings. Since $GBTC is up 76% since Aug so ARK *has* to sell many shares to keep a 9%-ish weighting. And even with that selling its weighting has gone up," Balchunas explained.

ARK Invest's strategic selling and investment strategy aligns with its approach of buying cryptocurrency stocks during downturns and capitalizing on positive trends to generate profits.

This year, ARK started offloading Grayscale Bitcoin Trust shares on Oct. 23, which was at the same time when Bitcoin was spiking toward the $34,000 price level.

The company's previous GBTC transaction was recorded in November 2022, when it sold 450,272 GBTC shares.

Wood's ARK is among the 12 spot Bitcoin ETF applicants waiting for approval from the U.S. Securities and Exchange Commission (SEC).

ARK Investment Management and 21Shares are inching closer to the approval of their joint spot Bitcoin exchange-traded fund following the submission of the third amendment to its prospectus this month.

The submission, dated Nov. 20, provides details of the firms' proposed spot Bitcoin ETF, including major aspects such as custody practices and methods for valuing assets.