Ark Invest Buys $1.4M Shares of Grayscale Bitcoin Trust (GBTC)

• Ark Invest spent $2.8m buying over 315,000 GBTC shares last week.
• Coinbase has the Bitcoins that GBTC is backed by.

Ark Invest, run by Cathie Wood, has reportedly invested an additional $1.4 million to acquire 176,945 shares of Grayscale’s Bitcoin Trust (GBTC) fund, as reported in an investor email.

The company has made its second sizable GBTC acquisition in as many weeks with this transaction. Bloomberg reports that the Florida-based investment group spent $2.8m buying over 315,000 GBTC shares last week. As of the right moment, about 6.357 million GBTC shares, or 0.4% of the firm’s total holdings, are held by Ark.

Ark Buys the Dip

Financial instrument GBTC allows investors to acquire exposure to Bitcoin without actually having to purchase and retain Bitcoin. Coinbase has the Bitcoins that GBTC is backed by. In the wake of the FTX hack, several large centralized cryptocurrency exchanges have revealed the amount of client funds they have on hand.

However, for security concerns, Grayscale chose not to provide specifics about the Bitcoin that supports GBTC. When crypto investors found out about this, GBTC’s already significant discount widened. In its most recent earnings report, Grayscale said that its underlying GBTC was worth $9.9 billion, or $14.43 per share.

In contrast, the current market price of GBTC is just $8.28, a markdown of 42.6% from Bitcoin’s worth. According to information provided by Ycharts, the GBTC discount reached an all-time high of 45.08% on Friday. What this indicates is that the market price of GBTC shares is below Bitcoin’s true worth. The GBTC price cut is not novel. Shares of GBTC have traded below their underlying asset value since February 2021.