To invest in Bitcoin ETFs, Cathie Wood’s ARK Invest has modified its prospectus (ETFs).
A revised SEC filing for the ARK Next Generation Internet ETF states that “other pooled investment vehicles that invest in Bitcoin, such as exchange-traded funds that are domiciled and listed for trading in Canada (Canadian Bitcoin ETFs)” (ARKW).
An exchange-traded fund (ETF) represents the world’s most popular cryptocurrency and allows investors to buy shares without having to hold or store the underlying asset.
Despite the long-standing desire of American investors for a Bitcoin ETF, the Securities and Exchange Commission (SEC) has so far rejected any attempts to launch one, citing concerns about price manipulation in the cryptocurrency market.
Canada, on the other hand, is one of the few countries that now offers Bitcoin ETFs. The Purpose Bitcoin ETF became the first North American Bitcoin ETF on February 18, followed by the Evolve Bitcoin ETF shortly after.
A third Canadian Bitcoin ETF, CI Galaxy, was approved by regulators in March. The Toronto Stock Exchange is where all three funds are traded.
Grayscale Investments’ flagship investment product, the Grayscale Bitcoin Trust (GBTC), is comparable to a Bitcoin ETF in that it allows investors to exchange shares in trusts that hold significant pools of Bitcoin.
However, shortly after the launch of the Canadian Bitcoin ETFs, GBTC’s historical premium—the difference between the price of GBTC shares and the underlying Bitcoin per share—became negative, indicating a drop in demand for the product.
According to YCharts, GBTC shares were trading at a 14.58 percent discount as of last Friday’s close.
Grayscale isn’t the only thing that ARK considers
According to Bloomberg ETF analyst Eric Balchunas, ARK Invest, which owns approximately 8.5 million shares of GBTC worth $313 million, is considering selling its ARKW stake in GBTC in favour of the Canadian Bitcoin ETF.
INTERESTING: ARK just amended the prospectus for $ARKW to say the fund may invest in crypto ETFs in Canada. My guess is they looking to swap out $GBTC, which they own $350m worth for one of the Candian ETFs, which tracks better. $BLOK just did this. pic.twitter.com/fVoiGI4CYH
— Eric Balchunas (@EricBalchunas) September 10, 2021Balchunas pointed out that GBTC is down 22% year to date, compared to a 6% decrease for the Purpose Bitcoin ETF over the same period.Balchunas speculated, “That’s a pretty significant dispersion.”
“I’m sure it irritates them.”He also urged that Cathie Wood stay with a Canadian Bitcoin ETF even if the SEC authorises a Bitcoin futures-linked ETF, noting that “you can’t beat a physically-backed Bitcoin ETF (outside of holding Bitcoin directly of course).”
Cathie Wood has been a long-time Bitcoin supporter, and in June, ARK Invest joined the list of more than a dozen U.S. Bitcoin ETF hopefuls.
Despite the evident demand for a Bitcoin ETF among American investors, SEC Chair Gary Gensler signalled last month that the Commission is unlikely to approve one.
Instead, he said he was looking forward to the SEC’s assessment of ETFs that follow Bitcoin futures traded on the CME (CME).
