Ark Invest, 21Shares could jump to bitcoin ETF assets lead: Analysts

Ark could look to sell its $130 million position in GBTC to inject capital into its proposed bitcoin ETF, Bloomberg Intelligence pros say

article-image

Ark Invest and Natalja Petuhova/Shutterstock and Adobe modified by Blockworks

share

If US regulators approve spot bitcoin ETFs, Ark Invest and 21Shares are well-positioned to rapidly accumulate assets, according to Bloomberg Intelligence analysts.

The Grayscale Bitcoin Trust (GBTC) could also have a leg up — if allowed to launch at the same time — given its current asset base of roughly $23 billion assets under management, according to Bloomberg Intelligence’s James Seyffart and Eric Balchunas.

The US Securities and Exchange Commission is set to rule on the Ark 21Shares Bitcoin ETF (ARKB) by Jan. 10, and industry watchers expect the regulator could greenlight a bunch of other similar offerings at that time. 

The regulator could also choose to deny these applications.   

Segment observers have said a bitcoin ETF, or multiple, could be one of the biggest ETF launches of all-time. A fight for assets between traditional finance giants such as BlackRock, Fidelity and Invesco — not to mention more specialized firms like Grayscale, VanEck, Bitwise and WisdomTree — is set to be fierce.

Flows and volumes are “crucial” to marketing an ETF, Seyffart and Balchunas said in a Wednesday research note. Capital flowing into a fund gives the appearance of success and interest, they added, which can spur other traders and investors to follow. 

With that in mind, the analysts argued that Ark Invest might choose to sell its current positions in the Grayscale Bitcoin Trust (GBTC) and port those assets over to ARKB.

The discount to net asset value at which GBTC’s shares trade has recently shrunk to a two-year low, and Grayscale executives have said such a discount would essentially disappear if it is allowed to convert to an ETF. 

The Ark Next Generation Internet ETF (ARKW) currently holds nearly 4.3 million shares of GBTC — worth roughly $133 million.

“This influx of flows and volumes might come in chunks, which could even be better for ARKB, since it would help make it look as though the ETF was attracting consistent interest in the first week,” Seyffart and Balchunas wrote.

An Ark Invest spokesperson did not immediately return a request for comment. 

The capital injection would be especially important given the size of its largest competitors. While Ark Invest’s US ETFs manage roughly $13 billion in assets, BlackRock ETFs, including those under its iShares brand, hold about 2.4 trillion.

Dave Nadig, financial futurist at data firm VettaFi, previously said capital markets depth and institutional volume would play a key role, noting BlackRock’s institutional relationships could help its bitcoin trust become a quick asset leader.

“[BlackRock and] Fidelity will add their bitcoin ETFs to their modeled/managed funds…possibly immediately to get a head start,” Michael Nasser, co-founder of digital currency brokerage Satstreet, said in an X post.

Loading Tweet..

Seyffart and Balchunas added that GBTC will also have an advantage if allowed to convert into an ETF when other firms launch bitcoin ETFs. The trust, which launched in 2013 and has eligible shares trading on OTC Markets Group, is set to become an ETF with regulatory approval, executives have said.

Read more: Grayscale to SEC: Don’t grant ‘prejudicial first-mover advantage’ for bitcoin ETFs

Grayscale Chief Legal Officer Craig Salm noted in an Aug. 31 interview with Bloomberg:   ​​”We’re the only ones with an actual fund today with [assets under management], trading volume and investors.”

The emphasis on marketing is especially pronounced given the rather unprecedented possibility that a bunch of bitcoin ETFs are allowed to launch on the same day. 

A dozen fund issuers had filed for spot bitcoin ETFs this year before Switzerland-based Pando Asset entered the race on Wednesday. The asset managers have filed amendments to their applications in recent weeks as they continue to meet with SEC officials.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Unlocked by Template.png

Research

With the spot ETH ETF approval, the institutions are coming. stETH - given its dominance in marketshare, existing liquid market structures, and highly desirable properties - is poised for institutions.

article-image

Launching cryptocurrencies the old fashioned way may soon make a return

article-image

Kraken and CertiK brought their beef to social media after Kraken said researchers exploited $3 million through a bug

article-image

NVIDIA’s historic run is only deepening the divide between mega-cap tech stocks and the rest of the market.

article-image

EIP-7702 was quickly adopted for the next Ethereum upgrade, but developers haven’t quite locked it down