- Cathie Wood, Ark Invest CEO and crypto bull, said her company did not invest in ProShares Bitcoin futures ETF.
- Ark Invest has its own Bitcoin ETF in the works.
- Bitcoin (BTC) prices reached a new All Time High (ATH) on Oct 20.
The United States recently approved its first Bitcoin futures ETF, the ProShare Bitcoin Strategy ETF, launched Tuesday and racked up nearly $1 billion in trading activity in one day. Mrs. Woods was talking at the Milken Institute Global Conference with Bloomberg’s Carol Massar.
As per a June filing, the Ark Invest CEO lent her firm’s name to a Bitcoin exchange-traded product that would track the performance of the world’s largest cryptocurrency as measured by the S&P Bitcoin index.
Mrs. Woods has been bullish on Bitcoin for some time now, revealing in her interview on Tuesday that she first entered the crypto market when the total cap was $6 billion. In contrast, the cryptocurrency market cap recently crossed $2.6 trillion.
Meanwhile, Bitcoin reached a new record high on Oct 20 after reaching $67083 and taking its Oct gains to 49.76%. The O.G crypto’s prices reacted to Bitcoin ETF approvals since investors view it as a sign of mainstream adoptions.
“Would Invest After Clarifying Tax Ramifications”
Cathie Wood’s fame as a star stock-picker rose to new heights in 2020 after many of her funds had a stellar run. Her flagship fund, ARK Innovation ETF (ARKK), gained 150% in the same duration. However, she chose not to invest in ProShare’s ETF as they are looking at it ‘very carefully.’
There are some tax ramifications we’d like to understand more having to do with contango, which is contango versus more normal backwardation. So not yet.Cathie Wood on investing in Bitcoin ETF.
Backwardation and Contango are terms associated with the commodity futures markets. Contango refers to a situation where the futures price of a commodity is higher than its spot price. Contango usually occurs when an asset price is likely to rise over time.
On the other hand, Backwardation is when the current price, or spot price of an asset, is higher than prices trading in the futures market. For example, the situation can occur if the current demand for an asset is higher than the contracts maturing in the futures market.
Meanwhile, Mrs. Woods also said she wishes to expose her clients to the next FAANG stocks. FAANG refers to stocks of Facebook, Amazon, Apple, Microsoft, and Alphabet Inc., Google’s parent company. Though investors understand these companies well, she is looking for the next stars on the stock market.
Ark Invest’s flagship fund, ARKK, had a less than stellar run after peaking in Feb 2021. However, she said that its “expected and wanted” prices would go down when asked about it. She explained it was necessary to avoid the fund becoming a bubble, where markets focus more narrowly on just one group of shares.
It remains to see if Ark Invest dips its toes in the Bitcoin ETF waters or waits on approval for its ETF fund.
What are Bitcoin ETFs?
A Bitcoin ETF allows investors, retail and institutional, to gain exposure to BTC without owning the world’s largest cryptocurrency itself. However, the ProShare ETF works with Bitcoin futures rather than the actual cryptocurrency.
A futures contract bets on the future prices of Bitcoin rather than its spot prices. As a result, the prices of ETF and bitcoin do not match. At present, the SEC has approved ETFs that only deal in Bitcoin futures, but investors’ hopes are high for a purely Bitcoin ETF.
At the time of writing, Bitcoin was trading at $65,139, down 0.46% on the day.