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Cathie Wood's Ark Invest Buys Grayscale Bitcoin Trust Shares Worth $2.8M

Benzinga logo Benzinga 11/15/2022 Murtuza Merchant
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Cathie Wood's Ark Invest has purchased Grayscale Bitcoin Trust’s (OTCQX: GBTC) shares worth $2.8 million.

The deal was announced days after the beleaguered crypto fund’s discount hit a new low.

Ark Invest lapped up 315,259 shares of GBTC, according to a disclosure made by the company.

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According to the company's transaction disclosure, it acquired 315,259 shares of GBTC. These shares have been added to the Ark Next Generation Internet’s ETF, with more than $2.8 million having been spent on the purchase by the asset management firm.

Ark Invest's First Purchase Since July

Since July 2021, Ark Invest has not purchased any GBTC.

Last Thursday, GBTC, which has been trading at a discount since the start of 2021, reached a record low of 41.69%.

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The asset management’s purchase comes at a time when the trust, which is purely invested in Bitcoin and intended to track its price, has been trading at a historically low discount to the value of the cryptocurrency it represents.

The fund's structure, which prohibits redemptions and prevents shares from being destroyed to keep up with changing demand, is what caused the dislocation.

Widening Difference Between GBTC and BTC

The dynamics have caused the difference between GBTC and Bitcoin (CRYPTO: BTC) to expand significantly during the past week. Bitcoin plummeted as a result of FTX's filing for Chapter 11 bankruptcy.

Ark Invest, which has held shares of the trust since late 2015, has GBTC as its ninth-largest investment.

While the discount has punished long-term investors in the $10 billion Bitcoin fund—the trust has increased by almost 1,200% since the beginning of 2016 compared to Bitcoin's 3,700% rise.

According to Bloomberg Intelligence, purchasing GBTC at a 40% discount to its net asset value is equivalent to purchasing Bitcoin for less than $11,000 as opposed to its current price of $16,400.

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