ark investments - Pwim.Net

Why Cathie Wood’s ARK Investments Skipped Buying the First Bitcoin Futures ETF Shares?

While investors bought huge amounts of the ProShares Bitcoin futures shares during the opening day, famous crypto bull Cathie Wood was not among them.

Speaking at the Milken Institute Global Conference on Tuesday as part of the interview with Bloomberg media, Wood talked about the ETF’s debut and said Ark held off purchasing ProShares Bitcoin Strategy ETF (BITO), citing tax implications.

“No, we did not [invest]. We’re looking at this very carefully […] there are some tax ramifications we’d like to understand more having to do with contango versus more normal backwardation,”

Wood was talking about the structure of the forward curve, whereby contango refers to the case whereby the forward price of a futures contract is higher than the spot price. Backwardation is the opposite when the forward price of the futures contract is lower than the spot price.

Bitcoin futures are often in contango. That is a possible reason institutional investors such as Ark took a wait-and-see approach during the launch day of ProShares Bitcoin futures debut on the New York Stock Exchange market.

Jeffery Halley, a senior market analyst at Oanda, gave some important explanations regarding the impact of contango on futures contracts like the ProShares Bitcoin futures ETF.

“Longer-dated contracts are more expensive than the front month. That means you lose money rolling expiring contracts into the new front month. They probably want to see an orderly roll with decent two-way liquidity and a shallower contango,” he stated in his Wednesday note.

As a result, Halley saw a thin trading volume for ProShares Bitcoin futures ETF from institutional investors like Ark Invest on Tuesday. Such institutions did not actively participate in buying BITO shares.

Overall, Wood still remains confident in Bitcoin since she started investing in the cryptocurrency believing that it could become as huge as the monetary base of the US, which stood at trillions of dollars. Currently, cryptocurrencies have a market valuation of $2.5 trillion, with Bitcoin holding almost half at $1 trillion.

During the interview at the Milken conference, Wood said: “This is the new bank – digital wallet – and it’s going to be true in this country. It’s going to be true around the world.”

Wood’s Investment Strategy

Cathie Wood’s ARK is a heavy bitcoin investor.

As reported by Blockchain.News in June, Ark invest, the investment company run by long-time Bitcoin bull Wood, applied with the US Securities and Exchange Commission for an intent to launch an EFT to track Bitcoin futures, but cautioned that it was not likely to proceed until issues revolving tax liabilities for retail investors are resolved with market regulators.

Wood has been a long-time proponent of cryptocurrency. She has exposure to the ups and downs of cryptocurrencies through the performance of leveraged stocks like Square and Coinbase in her various innovation-focused ETFs.

Reuters: BlackRock and Ark Investments Compete in Bitcoin ETF Fee Reduction

The biggest asset manager in the world, BlackRock, Inc., has just revealed that the cost for their planned spot Bitcoin Exchange-Traded Fund (ETF) would now be 0.25% instead of 0.30%, according to Reuters. This action is being taken in the middle of a competitive market where several investment managers, such as Ark Investment Management, are fighting for a position in Bitcoin ETFs. For its ARK 21Shares Bitcoin ETF, Ark Investment Management has also reduced its fee from 0.25% to 0.21%.

The price reductions announced by BlackRock and Ark are indicative of a larger trend in the investment management space, especially with regard to products that are centered on cryptocurrencies. These fee modifications are a part of these companies’ deliberate attempt to draw in more capital and get a competitive advantage, particularly in light of the increasing interest in cryptocurrency investments and the impending Securities and Exchange Commission (SEC) approval of Bitcoin ETFs.

This development represents a major change in the financial environment, as major conventional asset management firms are beginning to accept cryptocurrencies as a real asset class. Due to its enormous power and the several trillion dollars in assets it managed, BlackRock’s participation stands out in particular. The company’s debut into the Bitcoin ETF market has the potential to provide the cryptocurrency industry more credibility and stability.

But there’s more to this action than merely lowering fees. It also highlights the dynamics of the cryptocurrency sector as a whole and the way in which its regulatory landscape is changing. These asset managers are preparing for a potential spike in investor interest while the SEC awaits its decision on the approval of spot Bitcoin ETFs. The competition among ETF providers over fees highlights how desperate they are to get a piece of the anticipated capital influx into these novel investment vehicles.

After they are authorized, the ETFs are meant to provide investors with exposure to Bitcoin without all of the hassles associated with holding a cryptocurrency directly, such storage and security issues. A new generation of investors, ranging from big institutional players to regular retail investors, may be drawn in by this simplicity.

Furthermore, this growth coincides with heightened institutional interest and regulatory certainty in the bitcoin space. A market that is developing and progressively assimilating into the larger financial system is shown by the increasing acceptance of Bitcoin and other cryptocurrencies by traditional financial institutions.

To sum up, the lower fees that BlackRock and Ark have suggested for their Bitcoin ETFs represent a major turning point in the development of bitcoin investment products. This calculated action shows how cryptocurrencies are becoming more and more significant in the world of investments and how big businesses are still trying to have a footing in this emerging sector.