Cathie Wood news Archives

In a significant shake-up of its Bitcoin (BTC)-related holdings, Cathie Wood’s ARK Next Generation Internet exchange-traded fund (ETF) has made strategic changes as BTC ends the year with a significant 156% surge.

According to a Bloomberg report, the ETF sold all its remaining 2.25 million shares of the Grayscale Bitcoin Trust (GBTC) while acquiring 4.32 million shares of the ProShares Bitcoin Strategy ETF.

Caution As Reason For Exiting Grayscale Bitcoin Trust

According to Bloomberg, Wood cited caution as the reason behind the sale of the Grayscale Bitcoin Trust. The move was prompted by concerns that the anticipated conversion of the trust to a spot Bitcoin ETF might not receive approval from US regulators in early January.

Additionally, Wood highlighted the substantial reduction in the trust’s discount to its net asset value, which, combined with its price increase, influenced the decision.

Wood emphasized the unpredictability surrounding which Bitcoin-related offerings would gain regulatory approval, expressing optimism about Bitcoin while acknowledging the uncertainty ahead.

In this regard, Bloomberg ETF expert Erich Balchunas highlights that approximately $100 million of the proceeds were used to purchase the ProShares Bitcoin Strategy ETF (BITO), likely as a liquid transition vehicle to maintain exposure to Bitcoin while gradually transitioning into either ARKW or ARKB.

Bitcoin

Interestingly, ARK has now become the second-largest holder of BITO, although Balchunas clarifies that this is a temporary parking spot. Blachunas emphasizes that institutions, including ARK, often employ highly liquid ETFs for transitions of this nature.

Balchunas also points out that this move aligns with the prediction made by Bloomberg a month ago, reflecting strategic foresight on ARK’s part.

According to Balchunas, this decision is smart as it allows ARK to boost its own ETF’s assets under management (AUM) while saving investors from incurring a significant expense ratio in the process.

Wood’s Long-Term Vision

Per the report, the reduction in holdings of the Grayscale Bitcoin Trust has been a gradual process for Cathie Wood, even as the price of Bitcoin surged to its highest level since April 2022.

Throughout 2023, Bitcoin more than doubled in value, with significant gains occurring towards the end of the year amid speculation that the Securities and Exchange Commission (SEC) would approve spot Bitcoin ETFs in the first days of January 2024.

During the Sohn Australia conference last month, Wood touted the Grayscale Bitcoin Trust as her top pick. However, recent developments have led to a shift in the ETF’s portfolio composition.

In addition to the changes involving Grayscale and ProShares, the ARK ETF also purchased 20,000 shares of the ARK 21Shares Active Bitcoin Futures Strategy ETF and sold 148,885 shares of the cryptocurrency exchange Coinbase Global, according to the fund’s report.

The ARK Next Generation Internet ETF has achieved an impressive 103% gain for the year, surpassing the 55% advance of the Nasdaq 100 Index.

It is worth noting that the fund’s performance has been characterized by significant volatility, experiencing declines of 19% and 67% in 2021 and 2022, respectively.

Bitcoin

The leading cryptocurrency in the market is trading at $42,800, exhibiting a sideways price movement over the past 24 hours. During this timeframe, there has been a marginal decrease of 0.3% in its value.

Featured image from Shutterstock, chart from TradingView.com

Cathie Wood Predicts $25 Trillion Crypto Ecosystem

The entire crypto industry has witnessed unprecedented growth since the middle of October. According to data from Coingecko, the entire crypto market cap has increased 35% from $1.096 trillion on October 15th to a current value of $1.4828 trillion.

However, Cathie Wood is of the notion that this growth isn’t over, and the industry will reach a $25 trillion valuation in the near future. A $25 trillion market cap means the industry would have to grow a whopping 1,585% from its current level.

Cathie Wood had predicted earlier in 2021 that Bitcoin would climb more than 10 times its value in the next five years, back when the asset was still trading around $50,000. Given that Bitcoin is now selling at around $37,000, the host of Sqwauk Box, Andrew Ross Sorkin, questioned Wood as to whether or not she still stands by her prediction.

“If we have this conversation in ‘25, ‘26, are you on track?” Sorkin asked. “Yes,” Wood replied.

The CEO did mention that this growth would be feasible only if there were a regulatory green light to allow financial institutions to participate in the cryptocurrency market. She also brought up the role that Spot Bitcoin ETFs will play in the projected spike, particularly BlackRock and Coinbase’s plan to offer a spot Bitcoin ETF in the US.

“I think BlackRock and Coinbase’s partnership is going to be very important,” she said.

Crypto total market cap chart from Tradingview.com (Cathie Wood $25 trillion 2 coins Bitcoin Ethereum)

Bitcoin And Ethereum The Ones To Look Out For

Wood specifically called out two coins to look out for as catalysts for this growth: Bitcoin and Ethereum, the two leading assets. This isn’t surprising, as these two assets have developed better price stability than most over the years.

“Our expectation is that the crypto asset ecosystem will be dominated [by Ether and Bitcoin], and it will scale from a little more than $1 trillion today to $25 trillion in 2030 as this new world develops,” Wood explains.

The ARK Invest CEO has been a long supporter of Bitcoin. In another interview, she said she would prefer to hold Bitcoin for 10 years over cash and gold. The CEO is also no stranger to Bitcoin price predictions, as she has previously said that BTC will go to $500,000 and even reach $1.48 million in the next seven years.

According to CoinShares’ latest report, investment products tied to digital assets just reached a yearly institutional inflow of $1.14 billion. The majority of this money ($1.083 billion) has gone into Bitcoin investment products. This could signal the beginning of large-scale institutional investor participation that Wood believes will propel the crypto market cap to $25 trillion.

ARK Invest is also waiting for the SEC’s green light on its spot Ethereum ETF application. Approval of a Spot Bitcoin ETF by the SEC is expected to propel the crypto market into the next bull run.