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On June 28, 2021, the US management investment company ARK Invest submitted an application to the US Securities and Exchange Commission to establish a Bitcoin ETF. The ETF is called "ARK 21Shares Bitcoin ETF" and its trading code is "ARKB". The investment goal of this ETF is to track the S&P Bitcoin Index to measure the performance of Bitcoin.
Ark Invest, full name ARK Investment Management LLC, is an asset management company headquartered in New York, USA, founded by Cathie Wood in 2014. As of July 2021, the company manages approximately US$52.85 billion in assets.
Ark Fund mainly invests in companies that will apply revolutionary technologies in the future, including artificial intelligence, DNA sequencing, gene editing, robotics, electric vehicles, energy storage technology, financial technology, 3D printing, blockchain, cryptocurrency, etc. The company will also release market analysis, transactions, portfolios and research reports to the public.
In response to the pandemic in 2020, many central banks around the world implemented low interest rate policies, which led to a surge in the valuations of technology companies. The Ark Fund, which focuses on this type of investment, also benefited from this, with a full-year return of 143% in 2020. Its founder, Cathie Wood, is also known as the "Queen of the Bull Market."
Ark Fund Trends As the "Queen of the Bull Market", Cathie Wood's every move has attracted much attention. On January 26, 2021, Ark Invest released a report that predicted that Bitcoin would reach $400,000 per coin. Now the fund wants to launch a Bitcoin ETF, which has focused the market's attention on the Bitcoin ETF.
Ark Invest The SEC has yet to approve any cryptocurrency ETFs
An ETF is an investment vehicle that tracks the performance of a specific asset or group of assets. Most ETFs track stocks, but there are also ETFs that track the performance of the broader market, such as the S&P 500 ETF. However, investors who purchase ETFs do not actually own the stocks or assets, but only a portion of the fund. For example, if you buy a Bitcoin ETF, you do not actually own Bitcoin, but the ETF assets you purchase will fluctuate with the price of Bitcoin. Therefore, ETFs allow investors to diversify their investments without actually owning the assets.
For individuals who just want to keep an eye on gains and losses, ETFs offer a simpler alternative to buying and selling individual assets.
The benefits of Bitcoin ETFs also include that investors can invest in Bitcoin indirectly without going through the complicated Bitcoin trading process or going through cryptocurrency exchanges. In addition, since ETF holders do not invest directly in Bitcoin itself, they do not have to worry about the complex storage and security procedures required of cryptocurrency investors.
Cryptocurrencies have been growing in popularity recently, but in the entire investment space, ETFs are easier to understand than cryptocurrencies. Investors who want to participate in cryptocurrency trading can focus on trading instruments they already understand without having to learn complex trading procedures.
But today, the U.S. Securities and Exchange Commission (SEC) has not approved any cryptocurrency ETF. Canada approves 3 Bitcoin ETFs in one month Although the US SEC has not approved the listing of any Bitcoin ETFs for the time being, this does not mean that other countries will not approve it. In fact, the United States’ neighbor, Canada, approved three Bitcoin ETFs to be listed and traded on the Toronto Stock Exchange in one month.
Purpose Bitcoin ETF, the first Bitcoin ETF in North America and the first Bitcoin ETF in the world, was launched by Canadian asset management company Purpose Investments Inc. On February 18, 2021, the ETF (stock code BTCC) was officially listed on the Toronto Stock Exchange in Canada. The total trading volume on the first day was 9.3 million shares, with a total trading volume of US$145 million, making it one of the top ten most actively traded securities on the Toronto Stock Exchange that day. The trading volume of this ETF exceeded US$400 million in just two days after its launch, which shows how popular it is.
In addition to Purpose Investments Inc., Evolve Funds Group Inc. has also received approval from the Ontario Securities Commission (OSC) of Canada to establish a Bitcoin ETF for listing and trading. The new ETF will be traded under the ticker "EBIT" (denominated in Canadian dollars) and "EBIT.U" (denominated in US dollars), becoming the world's second Bitcoin ETF.
On March 5, 2021, the world's third Bitcoin ETF, CI Galaxy Bitcoin ETF, was successfully listed and traded in Canada, codenamed BTCX. The ETF was jointly launched by investment management company Galaxy Digital and CI GAM. Kurt MacAlpine, CEO of CI Financial Corp., the parent company of CI GAM, said: "BTCX provides investors with a safe and convenient way to use Bitcoin in their investment portfolios. I believe our ETF will stand out with its highly competitive pricing and good capabilities in managing alternative investments and digital assets."
According to the information disclosed on the official website, the information of various Bitcoin ETFs is summarized as follows: Brazil also approved the first Bitcoin ETF in South America on March 19, 2021, becoming the second country in the world to approve a Bitcoin ETF after Canada. The Brazilian Securities and Exchange Commission (CVM) approved the establishment of the first Bitcoin ETF, which was launched by local asset management company QR Capital and will be listed on the Brazilian Stock Exchange B3 with the code QBTC11.
In addition, Dubai approved the region's first Bitcoin ETF in April. The ETF was launched by Canadian asset management company 3iQ and will be traded on Nasdaq Dubai. 3iQ manages about $1.5 billion in assets. Its CEO Fred Pye said in an interview with Reuters that if the ETF is popular, the size of the fund will increase. The company raised more than $200 million by listing its Bitcoin ETF. The market demand for Bitcoin investment has not yet shrunk. The huge market demand has prompted companies to rush to apply to launch Bitcoin ETFs.
In March 2021, Mathew McDermott, head of digital assets at Goldman Sachs, released a survey result, which stated: Among the institutional clients surveyed by Goldman Sachs, more than one-third of the respondents said they currently hold digital assets, and more than half of the institutional clients intend to expand their digital asset portfolios in the coming months. They are witnessing huge institutional demand for Bitcoin and the crypto market, and there is no sign of abating in terms of institutional demand.
In addition, if the Bitcoin ETF is approved, it will bring a lot of business growth to the company. Matt Hougan, chief investment officer of Bitwise Asset Management, said in an interview that in addition to opening the door to ordinary investors, ETFs may also make it easier for more financial advisors to provide Bitcoin allocations to their clients. The company manages more than $1 billion in cryptocurrency funds and has sought to launch a cryptocurrency ETF.
The market demand for investing in Bitcoin continues to grow, and launching a novel Bitcoin ETF can not only meet this market demand, but also expand the company's business and bring additional income to the company. These reasons have prompted many companies to apply to the SEC for listing and launch Bitcoin ETFs.
Table 2 lists the time when major institutions submitted applications to the SEC to establish a Bitcoin ETF and the current status. We can see that March 2021 was the peak period for applications. At that time, the price of Bitcoin hit new highs, causing many institutions to rush to establish the first Bitcoin ETF fund.
Institutions and time periods that have applied to the SEC to establish a Bitcoin ETF in the past, 01 Blockchain The problem of price susceptibility to manipulation remains difficult to solve. Although Bitcoin supporters and many institutions are vigorously promoting Bitcoin ETFs, the US SEC has not yet approved any related ETFs.
The SEC believes that the price of Bitcoin is susceptible to market manipulation, especially in 2021, when the "Musk effect" was particularly evident. In February 2021, news broke that the SEC had begun investigating whether Musk was suspected of intentionally manipulating the virtual currency market. But Musk didn't care about the investigation, and even publicly stated: "I hope the SEC will really investigate. That would be great."
Tesla announced in February that it had purchased $1.5 billion worth of Bitcoin, causing Bitcoin to close at $44,755 that day, up 17.73% from the previous trading day.
On May 12, Musk tweeted that Tesla would shut down its Bitcoin payment channel because most of the energy used in Bitcoin mining comes from non-renewable energy. After the news came out, Bitcoin fell more than 7% to $52,669.
How Musk's tweets affect Bitcoin price trends, source: Bloomberg In the early morning of May 17, Musk hinted in a tweet that Tesla may have sold its remaining Bitcoins. Bitcoin then plummeted by more than 10%, falling to as low as $42,212. In the morning of the same day, Musk issued a statement to clarify that Tesla did not sell any Bitcoins. As soon as the news came out, Bitcoin rose by $2,500 in the short term to $44,712.
A tweet can affect the trend of Bitcoin, which has led the SEC to believe that the market is very susceptible to manipulation by certain people. Especially in the early stages of large companies entering the market, small moves can cause market shocks, and Tesla is a very good example.
But in the future, as more and more large companies or institutions invest in Bitcoin, its stability will increase a lot, but this requires time and market acceptance.
Although the SEC has not approved any Bitcoin ETFs yet, the market remains optimistic about Bitcoin ETFs. In January 2021, Biden announced that his choice for the next SEC chairman would be Gary Gensler, who had experience teaching cryptocurrency courses at MIT, prompting new optimism that the SEC would soon approve a Bitcoin ETF. Can SEC's approval of Bitcoin ETF drive a new bull market?
Bitcoin is called "digital gold." Some people believe that the impact of the approval of the Bitcoin ETF may be similar to that of gold.
ETFs have the following three advantages:
· Low purchase cost, fully tracking the trend of the index · High liquidity (quotes are refreshed every 15 seconds, it can be traded as quickly as stocks and is the most efficient financial product)
· Arbitrage operations can be performed (i.e., prices in different markets are different, and buying and selling operations are performed to earn the difference)
After the United States approved the first gold-backed ETF in November 2004, gold rose 318% in the next seven years. The high liquidity of ETFs, low transaction costs, and arbitrage operations by short-term operators have pushed up the liquidity of gold in the market, leading to price increases. It is expected that after the approval of the Bitcoin ETF, the price of Bitcoin may rise further, opening up a bull market for Bitcoin.
Source: FactSet Lowering the investment threshold and cost is also an advantage of ETFs. For example, when your family wants to invest in Bitcoin in the future, you don’t need to spend a lot of time learning how to buy, store and identify, nor do you need to seek help from so-called professionals. You can directly buy Bitcoin ETF funds to invest, follow the price trend of Bitcoin, and enjoy its benefits.
Many financial products and market dynamics in the US market are heavily regulated by the SEC. According to Statista data, the US financial market accounted for 55.9% of the global market in 2021. The US financial market occupies half of the world. If Bitcoin ETF is listed and traded in the US market, many funds and traders will be able to participate in the transaction, which may push up the price of Bitcoin. (01 Blockchain) |
