Ark Investment from Cathie Wood filed with the SEC an application for launch a Bitcoin futures ETF.
ARK’s Bitcoin Futures ETF
The fund is called ARK 21Shares Bitcoin Futures Strategy ETF and the ticker will be ARKA. It is a product where users buy shares. Indeed, the ETF will be listing on the CBOE.
The fund is fully exposed in bitcoin, and is dedicated to institutional investors.
This explains how the fund works in the forms disclosed by the SEC:
“The Fund seeks to invest in Bitcoin Futures so that the fund’s total economic exposure to bitcoin is approximately 100% of the Fund’s total assets (the“ Target Bitcoin Exposure ”). In other words, the Fund will seek to track the returns of a corresponding investment that directly holds only bitcoin. To the extent that the Fund’s economic exposure to bitcoin exceeds 100% of the Fund’s net assets, the Fund will generally have a leveraged exposure to the value of the bitcoin. This means that any change in the value of bitcoin will generally result in proportionately greater changes in the Fund’s total asset value and net asset value (“NAV”), including the potential for losses greater than if the exposure of the Fund to the value of bitcoin was not subject to leverage. There is no guarantee that the Fund will be able to achieve or maintain target exposure to Bitcoin ”.
A high-risk tool
The bottom looks like one highly risky tool. In fact, the note explicitly states that the value of the investment can arrivare even to zero:
“Bitcoin is a relatively new innovation, as are Bitcoin Futures, and both are subject to unique and substantial risks. In turn, by investing in Bitcoin Futures, the Fund is also subject to unique and substantial risks, including the risk that the value of the Fund’s investments may fall rapidly, even to zero. Bitcoin and bitcoin futures have historically been more volatile than traditional asset classes. You should be prepared to lose your entire investment ”.
Why the SEC could approve Cathie Wood’s Bitcoin ETF
Cathie Wood’s company is not the first to offer this type of product. Also Galaxy Digital by Mike Novogratz he had made a similar question. The head of the SEC, Gary Gensler had stated that the SEC would be more inclined to approve not Bitcoin ETFs, but ETFs based on BTC futures. This because the SEC cannot regulate Bitcoin, but it can control futures trading and thus guarantee greater protection for investors.
These words have sparked hope in those who believe that the time has come for the United States to approve a Bitcoin ETF as well. For this Ark and Galaxy Digital have decided to be ready by presenting a product that meets the requirements presented by Gary Gensler.
Buy the rumors
Who knows if it is a coincidence that lately i Bitcoin futures contracts they have seen their value soar. According to Forbes’ reasoning, this should have been due precisely the forthcoming approval of these futures-based ETFs. It’s a decision the SEC has been putting off for months now, however October could be the decisive month.
This type of tool would allow institutional investors to enter Bitcoin without buying BTC directly. When the SEC approves them, many analysts are expecting a sharp increase in the price of BTC which could be driven by the growth in demand.