ARK Invest Bets on Canadian Bitcoin ETFs

ARK Invest’s asset manager has amended the prospectus of the ARK Next Generation Internet ETF (ARKW). The fund will invest in Canadian cryptocurrency-based ETFs.

“The fund may interact with digital assets, such as Bitcoin, indirectly through investments in Canadian-registered trusts or other joint investment vehicles such as ETFs,” the document states.

The company noted in the prospectus that its fund may also invest in shares of the Grayscale Bitcoin Trust (GBTC). ARKW is among the largest holders of these securities. It owns about 8.5 million GBTC shares worth $319 million — the instrument accounts for 5.57% of its portfolio.

The Bloomberg analyst Eric Balchunas suggested that ARK Invest is aiming to replace GBTC shares with units of a Canadian ETF. He said that since February 2021, GBTC has fallen 22%, while the Canadian fund’s shares managed by Purpose Investments have fallen 6.46% over the same period.

Here’s why they doing it. $GBTC is down 22% vs the Canada bitcoin ETF which is down 6%. That’s pretty significant dispersion. I’m sure that’s irking them. pic.twitter.com/6erhjEHqIx

— Eric Balchunas (@EricBalchunas) September 10, 2021

“That’s a fairly wide dispersion. I’m sure that irks them [ARK Invest],” the analyst noted.

According to Balchunas, Cathie Wood’s firm will hold assets in the units of Canadian ETFs even after the SEC crypto-based futures funds based on cryptocurrencies. He explained that such instruments cannot outperform physically backed structures.

Bloomberg analysts forecast the U.S. regulator’s approval of a Bitcoin ETF by the end of October 2021.

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