Grayscale Bitcoin Trust ranks high among ARK’s Q2 2023 top performing ETFs.

Grayscale Bitcoin Trust ranks high among ARK's Q2 2023 top performing ETFs.

The Rise of Grayscale Bitcoin Trust (GBTC) in the Blockchain Industry

The blockchain industry continues to make waves in the financial world, with digital currency investment products gaining traction among investors. One notable performer in this space is the Grayscale Bitcoin Trust (GBTC), which emerged as one of the best performers at Cathie Wood’s ARK Invest in the second quarter of 2023.

According to ARK’s latest quarterly ETF report published on July 19, GBTC played a significant role in the success of its ARK Next Generation Internet exchange-traded fund (ARKW) in Q2. The data revealed that GBTC was among the top five drivers of ARKW’s growth, alongside other high-performing assets like Tesla, Shopify, Unity Software, and Draftkings.

Ranking in fifth place, Grayscale accounted for 108 basis points at ARKW, while Tesla, the top asset, amounted to 232 basis points. This highlights the substantial contribution GBTC made to ARKW’s performance, underscoring the growing importance of digital currencies in the investment landscape.

ARKW: A Leading ETF in the Blockchain Industry

ARKW stands out as one of the leading ETFs operated by ARK in terms of year-to-date gains, with an impressive increase of around 50% by June 30. This ETF aims to capture internet-based products and services, cloud computing, artificial intelligence, and e-commerce. Notably, approximately 19% of ARKW’s assets were related to blockchain in Q2, reflecting the increasing recognition of blockchain’s potential.

GBTC’s Performance and Asset Allocation

Although GBTC performed exceptionally well for ARKW in Q2 2023, it is interesting to note that it trails behind Coinbase in terms of asset allocation at ARKW. Grayscale accounted for nearly as much as ARKW’s holdings of Tesla, representing slightly above 7.5%. Meanwhile, Coinbase was the largest allocated asset, accounting for almost 9% of ARKW’s holdings.

This indicates that while GBTC is a significant contributor to ARKW’s growth, Coinbase remains the dominant player when it comes to asset allocation. This is not surprising considering Coinbase’s position as a leading cryptocurrency exchange platform, which has garnered substantial attention and investment.

Other Key Assets in ARKW’s Portfolio

Aside from GBTC and Coinbase, other notable assets by allocation in ARKW’s portfolio include Jack Dorsey’s crypto-related platform, Block. Ranked fourth, Block accounted for 7% of ARKW’s total assets in Q2. However, unlike GBTC, Block was among the top five worst performers for ARKW, exerting a negative impact on its overall performance in Q2.

It is worth mentioning that ARK’s latest quarterly report does not include the company’s most recent large sales of Coinbase stock. As Coinbase shares reached above $90 in mid-July, ARK took the opportunity to cash in, selling nearly one million shares worth approximately $97 million.

The CEO’s Bullish Stance on Coinbase and Bitcoin

Despite selling off some of its Coinbase stock, ARK’s CEO, Cathie Wood, remains optimistic about the future of Coinbase. Wood’s bullish stance is largely driven by Ripple’s recent legal progress in the long-running action initiated by the United States Securities and Exchange Commission. This positive development has contributed to Wood’s overall confidence in the potential of Bitcoin, with her predicting that it could reach an astounding $1.5 million per coin in the future.

In conclusion, the blockchain industry continues to evolve, with digital currency investment products like GBTC gaining recognition and delivering impressive performance. ARKW’s success in Q2 2023 can be attributed, in part, to the contribution of GBTC. While Coinbase remains the dominant asset in ARKW’s portfolio, other blockchain-related assets, including Block, play significant roles as well. The future of the blockchain industry looks promising, as more investors recognize the potential and value of cryptocurrencies and related technologies.

Note: All images used in this article are sourced from ARK Invest’s quarterly report.