Cathie Wood’s Ark Invest filed with the Securities and Exchange Commission on Monday to create a bitcoin exchange-traded fund.
Wood — a longtime bitcoin bull — has been buying up proxies for the digital asset in names such as Coinbase and Grayscale Bitcoin Trust. Now, the innovation investor is seeking to own the actual asset itself.
The ETF’s investment objective is to track the performance of bitcoin, according to the SEC filing. The fund would trade under the ticker symbol “ARKB,” if approved by the SEC. Ark Invest is working in partnership with 21Shares to launch the ETF.
Bitcoin has hovered around $34,000 for the past couple of weeks as it struggles to reclaim its May highs. Many in the trading community have kept a watchful eye to see if it would hold at $30,000 as it continued its decline. Some still say it could drop as low as $20,000 before rebounding.
However, the digital asset has nearly been cut in half since its all-time high of about $63,000 in April. China’s bitcoin crackdown, Tesla CEO Elon Musk’s decision to stop accepting bitcoin for its electric vehicles, and excessive risk taking by crypto traders have all contributed to recent price swings.
Ark Invest acknowledged the volatility associated with the digital asset in the “risk factors” section of the filing.
“The market value of bitcoin is not related to any specific company, government or asset. The valuation of bitcoin depends on future expectations for the value of the Bitcoin network, the number of bitcoin transactions, and the overall usage of bitcoin as an asset. This means that a significant amount of the value of bitcoin is speculative, which could lead to increased volatility. Investors could experience significant gains, losses and/or volatility in the Trust’s holdings, depending on the valuation of bitcoin,” the S1 filing stated.
The SEC last week again postponed a decision to approve the first bitcoin ETF. The latest action comes as SEC Chairman Gary Gensler has called for more regulation of cryptocurrency exchanges and greater investor protections.
So far, there have been eight other bitcoin ETFs filed with the SEC.
Coinbase, the world’s largest cryptocurrency exchange, is a top 10 holding in Wood’s flagship fund Ark Innovation. Grayscale Bitcoin Trust is a top 10 holding in Ark Next Generation Internet ETF.
Wood has said she sees a future where bitcoin is part of a balanced investment portfolio. Ark Invest estimates that if 1% of the corporate cash of every company in the S&P 500 were converted into bitcoin, then the asset’s price would balloon by more than $40,000 from its current levels. If the cash level increased to 10% from each company in the broader stock index, bitcoin’s price would increase by more than $400,000, the firm said.
With Gensler — a longtime financier who taught a digital currency class at the Massachusetts Institute of Technology — being nominated to lead the Securities and Exchange Commission, the watchdog could warm to crypto during the Biden administration, Wood told CNBC earlier this year.
Wood’s disruptive innovation funds have recently turned a corner after months of underperformance amid a rotation into value stocks. Shares of Ark Innovation are up more than 16% in June.
— CNBC’s Tanaya Macheel and Yun Li contributed to this report.