This ARK Fund Has a Big Bitcoin Stake. It’s Rising Even as the Currency Falls.

As of Tuesday, the fund had a 3.6% weight, or $207 million worth of shares, in the Grayscale Bitcoin Trust (GBTC), a closed-end fund holding Bitcoin in custody for its shareholders. The ETF also had a 3.3% weight, or $189 million worth of shares, in the cryptocurrency exchange Coinbase Global (COIN)

Those holdings are a drag on the fund, given Bitcoin’s hefty losses. Early Tuesday, the cryptocurrency tumbled below $30,000 for the first time since January, though it later recovered to about $32,500, for a loss of about 18% over the past week. Coinbase is down 4% over that time.

The ARK Next Generation Internet ETF, though, has risen 4.6% during the same period, with a gain of 1.7% on Tuesday alone. One positive factor is that the Grayscale fund, which was already trading at a discount to Bitcoin’s price, didn’t fall as much as the cryptocurrency itself.  

The ARK fund’s heavy holdings in other innovative internet stocks have limited the damage as well. Its second-largest holding, Shopify (SHOP), for example, has gone up by 14% in the past week. Other major holdings, such as Roku (ROKU), Twilio (TWLO), and Unity Software (U) have gained 19%, 12%, and 13%, respectively.

All those stocks struggled earlier this year as cyclical names gained favor and inflation worries flared up, but they have been on a steady upswing again since mid-May.  

Bitcoin is now up just 13% for the year, and has lost more than half its value since hitting its record of $64,829 on the day in April that Coinbase went public. The ARK Next Generation Internet ETF is now just slightly below where it was at the beginning of the year. At its low point for 2021, in the middle of May, the fund was down 16% year to date.

Write to Evie Liu at evie.liubarrons.com