(Bloomberg) — Cathie Wood’s Ark Investment Management LLC is buying shares in a just-launched Bitcoin exchange-traded fund as competition between open issuers heats up.
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The ARK Next Generation Internet ETF (symbol ARKW) sold $16 million worth of its position in the futures-backed ProShares Bitcoin ETF (BITO) on Tuesday to make room for the purchase of 365,427 shares of the ARK 21 Shares Bitcoin ETF (ARKB), which now makes up 1% of ARKW Fund, according to data compiled by Bloomberg.
A consistent offering from its sister fund could help give ARKB a boost in a highly competitive environment for bitcoin spot funds. The SEC allowed 10 such ETFs to launch at once last week, preventing any of them from gaining a leadership advantage. This has created an unusually high-risk horse race, given that all the funds hold the same underlying assets. Converting a company’s own money into ETFs is one way to achieve scale quickly — an important benchmark for financial advisors and financial platforms, many of which have minimum asset limits, according to Bloomberg Intelligence.
“Cathie Wood buying ARKB along with her other ETFs is a cheat code for increasing assets and volume, but she’s not the only issuer that can do that and it’s not the only cheat code out there,” Bloomberg Intelligence ETF analyst James said. Seyphart said. “We could see other issuers putting their products into modular wallets or bringing your assets in as standard.”
Although some flow data is delayed due to ETF accounting, the data available so far shows that investors have pumped an estimated $803 million into funds over the past three days, suggesting that even beyond potential initial funds from issuers… funds, the demand for Bitcoin is strong. Exposure to a leveraged ETF.
BlackRock’s iShares Bitcoin Trust (IBIT) raised the most money, taking in $710 million. Fidelity’s FBTC received approximately $524 million. The inflows more than make up for the money that has been drained from Grayscale Bitcoin Trust (GBTC) since its debut as an ETF.
As expected by industry analysts, investors have withdrawn about $1.2 billion from GBTC over the past three trading sessions. The fund has been in a trust structure since 2013, but last Thursday was one of the first days each investor in the fund could redeem their shares at close to net asset value and take profits.
“Grayscale has dominated the regulated Bitcoin investment market for more than a decade. Now that other issuers are coming into the market, we are naturally seeing some rotation in These new products.” “It is the total net inflows into Bitcoin investment products that matter for prices, not the substitution from one product to another.”
The net inflows come amid huge trading volume. In the first three days of trading, the ETFs saw approximately $9.8 billion worth of trades. That’s roughly in line with the three-day rolling value of all 500 ETFs launched in 2023, according to Bloomberg Intelligence.
“spaghetti cannon”
The popular debut of spot bitcoin ETFs has companies scrambling to capitalize on the hype. Grayscale and Roundhill have filed for bitcoin-hedged ETFs, which would replicate one of 2023’s most popular equity ETF strategies using options strategies to generate additional returns.
And while questions remain about the fate of bitcoin futures ETFs — VanEck announced Wednesday that it will shut down its futures-backed product — ProShares is doubling down. The company filed for leveraged and inverse bitcoin products this week, which use derivatives to deliver performance, according to Securities and Exchange Commission filings.
If spot bitcoin ETFs continue to generate inflows and interest, it is inevitable that issuers will try to launch cryptocurrency ETFs from every bar, according to Nate Geraci of The ETF Shop.
“The highly successful first few days of spot bitcoin ETF trading will only encourage issuers to fire up the spaghetti cannon,” said Geraci, head of the advisory firm. “I expect we will see every flavor of a leveraged, inverse, and options-based spot bitcoin ETF strategy. Anytime there is a successful ETF category, issuers will look to build on it by mixing in new components in an effort to attract investors.”
-With assistance from Isabel Lee.
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