Cathie Wood-led ARK Invest divests BITO shares to double down on in-house Bitcoin ETF

In this move, the Cathie Wood-led firm liquidated 757,664 shares of the ProShares Bitcoin Strategy ETF (BITO) at an approximate value of $15.8 million, redirecting the proceeds to acquire 365,427 shares of ARKB, also valued at $15.8 million.

ARKB is one of the newly approved spot Bitcoin ETFs in the U.S. BitMex Research data shows that the fund has recorded a positive net flow of $229 million within the first three days of trading.

Despite this transaction, ARKW still retains around 3.4 million shares of ProShares’ BITO, constituting approximately 5.56% of its overall holdings.

This development is coming less than a month after ARKW sold all its positions in Grayscale’s Bitcoin Trust (GBTC) and purchased a $92 million position in ProShares’ BITO. At the time, observers characterized the move as a transitional strategy for ARKW to retain “high beta” with Bitcoin.

Community reaction

Meanwhile, this strategic reallocation within ARK’s portfolio has garnered attention in the crypto community, with many interpreting it as a move to enhance market visibility.

Nate Geraci, founder of ETF Store, opined that ARK Invest’s maneuver is geared toward competitive positioning in the market and noted that the move would help the firm reduce the high fees it was paying previously for this same BTC exposure.

He said:

“ARK was paying 2% fee annually for GBTC (pre-uplisting). Then 95bps for BITO. Fees now go away. Much more pure bitcoin price exposure remains. Not a revenue generator for ARK, but will make them more viable competitor from optics standpoint (AUM, etc).”

Speculations also abound that this strategic realignment would allow ARKW to invest as much as 25% in its subsidiary. Recently, the firm submitted an application to the SEC seeking approval to invest up to 25% in a subsidiary, a departure from the perceived 10% limit.

“ARKW may gain exposure to bitcoin and other cryptocurrency-related investments by investing up to 25% of its total assets in a wholly-owned subsidiary of the Fund organized as a company under the laws of the Cayman Islands,” the filing reads.