During an interview with Peter McCormack, host of the “What Bitcoin Did” podcast, ARK Investment Management CEO Cathie Wood spoke about her entry into the cryptocurrency market. According to Wood, her first purchase of Bitcoin (BTC) took place sometime in the year 2015. The manager stated that she bought BTC after listening to advice from Arthur Laffer, known for creating the Laffer curve. Generally speaking, the Laffer curve theory states that government tax revenue falls as the tax rate increases. Wood knew about BTC before Laffer, but introduced the cryptocurrency to the economist asking him to study. According to the manager, Laffer’s opinion on BTC was succinct: “I’ve been looking for this since we got off the gold standard.” The economist completed by saying that BTC was a rules-based monetary system. Next, Wood asked him how big BTC could get in the future, to which Laffer replied, “How big is the U.S. monetary base?”
great advice
At the time, Wood said he followed Laffer’s advice and exposed himself to BTC. At first, she bought $100,000 in BTC (about R$520,000 in current values) when the cryptocurrency was worth about $250. by Wood. The manager said she never sold any BTC from that initial investment. Therefore, this means that Wood’s BTC holdings have grown to $7.6 million, or nearly BRL 40 million in current values. ARK is a manager focused on innovative and disruptive investments, so the BTC thesis makes perfect sense in its portfolio. The manager also owns shares in companies linked to the technology sector, such as Tesla, but had no investments in BTC. That’s because at the time Cathie Wood got to know BTC, there weren’t many vehicles for big investors yet. And because of US regulation, ARK couldn’t invest in anything other than tech stocks. Subsequently, ARK was finally able to gain exposure to BTC through the Grayscale Bitcoin Trust (GBTC). Its ARK Next Generation Internet Fund (ARKW) currently holds approximately 5.9 million GBTC shares, valued at approximately $67.4 million. Wood remains bullish on BTC and believes GBTC is too “cheap” at current prices. At the moment, the fund operates at a 35% discount to the BTC price. But Wood believes the fund could rise again if Grayscale manages to turn it into a BTC ETF.
Back to Coinbase
In addition to BTC, ARK has returned to exposure to shares of companies linked to cryptocurrencies. Its Fintech Innovation Fund (ARKF) purchased 10,880 Coinbase (COIN) exchange shares, bringing its equity holdings to $60.5 million, or approximately 8% of the fund’s weight. With this, ARK makes its first purchase of Coinbase shares since June, according to filings with the US Securities and Exchange Commission (SEC). In August, Wood said that the fund reduced its holdings in Coinbase because of an SEC investigation against the exchange. However, Wood and ARK remained quite bullish on Coinbase despite the SEC complaints. and cryptocurrencies in general. SEC filings show that ARK owns 7.7 million shares of COIN and has added around 2 million shares to its holdings over the past year. Records show that across all ARK COIN purchases, the asset manager paid an estimated average price of $218.45.
