Cathie Wood's ARK Invest keeps buying more crypto assets despite FTX bankruptcy

Published Tue, Nov 15 20227:58 AM EST

Jesse Pound @/in/jesse-pound @jesserpound

Cathie Wood's Ark Invest is not backing away from cryptocurrency after a steep drop in prices and the collapse of FTX. The Ark Next Generation ETF bough 315,259 shares of the Grayscale Bitcoin Trust on Monday. The trust now accounts for 4.6% of the Ark fund's holdings. There is no pure-play bitcoin ETF, and the Grayscale vehicle is seen as a proxy to gain exposure to the most popular cryptocurrency. However, the price of the trust has dropped more than 80% over the past year, and the fund trades well below the value of the bitcoin it holds. The crypto industry has been in turmoil for the last two weeks as FTX, one of the most well-regarded crypto exchanges, has imploded. The company filed for bankruptcy last week after rival exchange Binance pulled out of a potential rescue deal, and CEO Sam Bankman-Fried resigned amid reports that FTX had let associated hedge fund Alameda Research trade customer funds . The price of bitcoin has dropped more than 18% since the end of October. ARK said in a newsletter on Monday that there were "several silver linings" to these events, including that the bitcoin blockchain continued to operate during FTX's crisis and arguing that this would push the industry to be more transparent. "ARK's conviction in the long-term promise of public blockchains across money, finance, and the internet is not wavering. While the crypto asset market could labor under selling pressure and liquidity crunches in the short term, we believe this crisis is purging bad actors and will enhance the health of the crypto ecosystem with more transparency and decentralization in the longer term," the newsletter said. Wood rose to prominence in 2020 when her growth-oriented investing style capitalized on pandemic winners like Zoom Video, but her performance has suffered with rising interest rates. The Next Generation Internet ETF is down 61% year to date, and the flagship Ark Innovation ETF (ARKK) is down nearly 49%. The flagship ETF has remained popular with investors, however, and continues to attract significant inflows. The Next Generation Internet ETF has seen outflows of more than $500 million this year.

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