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

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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.

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.

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