ARK Investment obtains $2.8 million of Grayscale Bitcoin Trust despite adverse market conditions

• The Grayscale Bitcoin Trust (GBTC), a traditional investment trust vehicle with BTC exposure, is seeing its premium recover from historical lows of -41%.
• Tech specialist fund ARK investment has bought GBTC shares for its Next Generation Internet ETF, which is also trading at a discount of 3.24%.
• Earlier this month, ARK investment also racked up 420,949 shares of Coinbase to amass 8.12 million COIN in its holdings.

The Grayscale Bitcoin Trust (GBTC), which offers exposure to Bitcoin via the protection of a traditional financial security, has been a part of investors' portfolios despite the consistent decline in Bitcoin price and the trust’s value over the last couple of months. Nevertheless, new tech fund ARK Investment has made the headlines after investing a huge sum in GBTC amid worsening geopolitical and crypto market conditions.

ARK Investment leans in on Bitcoin fund

The Grayscale Bitcoin Trust was trading at a historical discount of 41.69% to net asset value (NAV) last week following the sharp decline in the price of Bitcoin. Still, ARK purchased about 315,000 shares of GBTC valued at around $2.8 million on Monday, November 14. These shares will be added to ARK's Next Generation Internet [ARKW] exchange-traded fund (ETF), which is currently trading at a NAV discount of 3.24%.

Interestingly, GBTC's discount currently hovers around 39.79%, a considerable improvement from the previous week.

GBTC discount to NAV

This purchase by ARK Investment, owned by maverick investor Cathie Wood, comes days after the firm was reported to have increased its stake in Coinbase. Already holding 7.7 million shares of Coinbase's COIN, ARK added another 420,949 shares to bring the total to 8.12 million shares. The cumulative value of ARK's COIN holdings currently stands at $403 million. The Florida-based fund’s total Assets Under Management (AUM) stand at circa $14.1B, a substantial decline from a peak of $50B in February 2021 before the crypto market crash. 

Initially, ARK’s move was thought to have been triggered by comments from Coinbase's CEO Brian Armstrong reassuring investors no material exposure to FTX, FTT or Alameda. Looking at the GBTC accumulation, however, it wouldn’t be out of the question to speculate that Cathie Wood's company might be ‘making the market’ instead of just investing in it.

Cathie Wood finds inspiration

Cathie Wood’s buying spree resonates with billionaire investor Warren Buffet’s investment approach to buy when there’s blood in the street. 

Interestingly, many market analysts continue to forecast that the bottom for cryptos is still far off. If that is the case, ARK will be absorbing a lot of drawdown before the market turns around.

FTX’s recent collapse has stirred up the markets for the better, at least from a macro investors’ perspective. However, FXStreet’s analysts believe that the bottom, albeit close, is still not here yet.  Bitcoin currently trades at $16,823 after recovering from the November 8 low of $15,600. 

As described in a previous report, the $11,900 to $13,500 range is more likely to represent the low point of a macro bottom from a technical perspective.

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