Investment of the Arch of Cathie Wood filed an application with the SEC to launch an ETF based on Bitcoin futures.
ARK Bitcoin Futures ETF
The fund will be called ARK 21Shares Bitcoin Futures Strategy ETF and the ticker will be ARKA. It is a product where users buy stocks. ETF will be listed on the CBOE.
The fund is fully exposed to bitcoin, and is dedicated to institutional investors.
This is how the fund’s operation is explained in the forms distributed by the SECOND:
“The Fund seeks to invest in Bitcoin futures contracts so that the Fund’s total economic exposure to bitcoin is approximately 100% of the Fund’s total assets (the“ Bitcoin Target Exposure ”). That is, the Fund will seek to track the returns of a corresponding investment that directly held only bitcoins. To the extent that the Fund’s economic exposure to bitcoin exceeds 100% of the Fund’s net assets, the Fund will generally have leveraged exposure to the value of bitcoin. This means that any change in the value of bitcoin will generally result in proportionately larger changes in the total asset value and net asset value (“NAV”) of the Fund, including the potential for greater losses than if the exposure of the Fund. Fund to the value of bitcoin was not in debt. . There can be no assurance that the Fund will be able to achieve or maintain the target exposure to bitcoin ”.
A high risk instrument
The fund is presented as a high risk instrument. Indeed, the note explicitly says that the value of the investment may go down to zero:
“Bitcoin is a relatively new innovation, just like 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 decline rapidly, including to zero. Bitcoin and Bitcoin futures have always been more volatile than traditional asset classes. You have to 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. Galaxy Digital by Mike Novogratz had also filed a similar request. The head of the SEC, Gary Gensler, had said that the SEC would be more inclined to approve not ETFs on Bitcoin, but ETFs based on BTC futures. This is due to the fact the SEC can’t regulate Bitcoin, but it can control futures transactions and thus offer more protection to investors.
These comments have given hope to those who believe that the time has come for the United States to also approve an ETF on Bitcoin. That’s why Ark and Galaxy Digital have decided to be ready with a product that meets Gary Gensler’s requirements.
Buy the rumors
It may not be a coincidence that Bitcoin Futures have seen their value skyrocket in recent times. According to Forbes’ reasoning, this would be due to the imminent approval of these term ETFs. It’s a move the SEC has been pushing back for months, but October could be the month the decision is made.
This type of instrument would allow institutional investors to get into Bitcoin without buying BTC directly. When the SEC approves them, many analysts expectt the price of BTC on the rise, which could be driven by the growth in demand.