One of the initial exchange-traded funds to invest in bitcoin, the ARK Innovation ETF (ARKK), has divested liquidated a large number of its bitcoin holdings, referring to regulatory and tax issues.
ARKK won ETF.com’s “ETF Of The Year” award last year for achieving its goal of providing access to disruptive technology. It won the award partially as a result of its bitcoin allocation, which ranged between 6 and 10 percent according to FactSet. Bitcoin was taking the leading at some point on the list of the fund’s holdings.
Catherine Wood, Ark Investment Management, CEO noted in December 2017 that bitcoin was a bigger idea than Apple.
Given that the ARK’s fund could not directly own bitcoin, in 2015, it went ahead to buy its shares in Grayscale Investment’s Bitcoin Investment Trust (GBTC), when bitcoin traded below $250.
The ARK Web x.0 EFT, an internet-focused fund was the only ETF that matched ARKK’s access to bitcoin.
The fund’s bitcoin holding boosted the returns last year, seeing both funds record over 87 percent in 2017, while GBTC rose 1,550%.
But, Ark started paring its bitcoin experience across both funds this year, as the cryptocurrency market went through a bearish cycle. Presently, ARKK has 0.5% in bitcoin whereas ARKK has 0.6%. According to the company, tax and regulatory issues were behind the drop.
From the look of things, bitcoin’s performance was also a contributing factor towards the decline.
The liquidation of Ark’s bitcoin holdings has made it tougher for investors to have an understanding of the leading cryptocurrency through traditional financial instruments.