ARK Innovation ETF (ARKK), the flagship ETF saw an inflow of $464 million inflow last week registering its highest ever inflow in 2021 and its second-highest of all time. The inflow is believed to have come from the rising stock prices of tech companies which is the primary composition of ARKK. Apart from the flagship ETF, two other ETFs of the investment group also registered a positive net inflow after a week of heavy shorting against the fund.
The ARK Investment Management is lead by Cathie Wood, a known Bitcoin proponent herself, and even supported Tesla’s decision to buy $1.5 billion in Bitcoin calling it a tipping point. Ark was the first to highlight the idea of firms using bitcoin as a way to diversify corporate cashback in August 2020. Wood recently also came down heavily on new treasury secretary Janet Yellen for her remarks on Bitcoin’s energy consumption and its impact on the environment.
Steen Jakobsen, Saxo Bank’s Chief Investment Officer believes the recent massive inflow into ARKK has primarily come from investors looking for alternatives to bonds and the recent rise in Tech stocks and the equity market. However, he also warned about possible volatility in the ETF owing to the Tesla stocks. He said,
“Tesla-Bitcoin-Ark risk cluster could still induce volatility in equities.”
The price of Tesla stocks starting to decline since the electric car-maker allotted 9% of their treasury reserve into Bitcoin. The Tesla Stocks were trading above $850 on 8th February when the firm invested in Bitcoin and since then the price has corrected up to $200 before registering a minor recovery on Friday. The traditional financial analysts believe allocating such a significant portion of their cash reserve into a highly volatile asset like Bitcoin was a bad move, however, the likes of MicroStartegy and Cathie Wood see it as a tipping point of institutional adoption.
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