Ark’s Bitcoin ETF Fate in SEC’s Hands as Deadline Approaches

As the January 10, 2024, deadline for the U.S. Securities and Exchange Commission (SEC) to decide on Ark Investment’s spot Bitcoin (BTC) exchange-traded fund (ETF) application looms, the financial world watches closely. The Florida-based asset management firm, under the leadership of Cathie Wood, has updated its S-1 filings with the SEC as of December 2, 2023, in anticipation of a potential green light for their much-discussed Ark21Shares Bitcoin ETF.

SEC Extends Review on Ark’s Bitcoin ETF

The SEC, led by Gary Gensler, has extended its decision period by up to 240 days, reflecting the complexities and public concerns surrounding spot BTC ETFs. This extension follows a history of rejections of similar applications by the financial regulator. Ark Investment, founded by Cathie Wood in 2014, seeks approval for an ETF to track Bitcoin’s performance, leveraging data from multiple crypto exchanges as indexed by the S&P Bitcoin Index. The proposed ETF, resulting from a partnership with 21Shares, is set to be listed on the Cboe BZX Exchange.

In a recent interview with the Wall Street Journal, Wood expressed confidence in the potential approval, noting that such a move by the SEC would grant a new level of credibility to spot bitcoin ETFs. Wood also projected a significant BTC price rise, suggesting it could reach between $1 and $1.5 million. Bloomberg’s analysts have rated the likelihood of the SEC’s approval above 60%, indicating a cautiously optimistic market sentiment.

Ark Rebalances Portfolio Before SEC Decision

In the wake of the pending decision, Ark Investment has been actively managing its cryptocurrency-related assets. The firm recently sold about 102,672 shares of the Grayscale Bitcoin Trust (GBTC), acquiring approximately $3.6 million in the process. Additionally, Ark offloaded over 200,000 shares of Coinbase on December 5. Despite these sales, GBTC remains the third-largest holding in the ARK Next Generation Internet ETF (ARKW), comprising about 8.36% of the portfolio.

These transactions reflect a strategic approach by Ark, typically accumulating shares during market downturns and liquidating some holdings during upward trends. This strategy aligns with the current market climate, as Bitcoin has shown significant growth in the final quarter of 2023. The leading cryptocurrency by market capitalization is trading at $43,924, marking a more than 16% increase from its value a month prior.

The impending decision by the SEC on Ark’s spot BTC ETF carries significant implications for Ark Investment and the broader cryptocurrency market. Approval could signal a new era of legitimacy and mainstream acceptance for cryptocurrency-based financial products. Conversely, a rejection might reinforce the existing hesitancy and regulatory concerns surrounding such products.

Read Also: Cathie Wood’s Ark Invest Sells $15 Mln Coinbase Shares As COIN Price Hit 52-Week High