Ark Invest; Insider
- Ark Invest's Cathie Wood did not join the frenzy surrounding the debut of the first bitcoin-futures ETF, but is not ruling it out.
- She said Ark is holding off from buying ProShares Bitcoin Strategy ETF, citing tax implications.
- "We're looking at this very carefully … there are some tax ramifications we'd like to understand more."
Ark Invest founder and CEO Cathie Wood did not join the Tuesday frenzy surrounding the first bitcoin-futures exchange-traded fund to be listed in the US, but is not ruling it out entirely.
The star stock picker revealed in an interview at the Milken Institute's conference that Ark is holding off buying ProShares Bitcoin Strategy ETF (BITO), citing tax implications.
"No, we did not," Wood said when asked if she bought during the fund's debut. "We're looking at this very carefully … there are some tax ramifications we'd like to understand more having to do with contango versus more normal backwardation."
Wood was referring to the structure of the forward curve. Contango is a situation when the forward price of a futures contract is higher than the spot price. Backwardation is the reverse, when the forward price of the futures contract is lower than the spot price.
In bitcoin's case, its futures are often in contango. This is probably why institutional investors like Ark had a wait-and-see stance, said Jeffrey Halley, senior market analyst at Oanda.
"Longer-dated contracts are more expensive than the front month," Halley said in a Wednesday note. "That means you lose money rolling expiring contracts into the new front month. They probably want to see an orderly roll with decent two-way liquidity and a shallower contango."
But while Oanda saw thin trading volume for BITO from institutional investors on Tuesday, Vanda Research said they likely accounted for the bulk of overall volume as retail investors sat out the debut.
Still, the ProShares Bitcoin Strategy ETF was the second-biggest ETF launch ever, with more than $1 billion worth of shares traded on its first day.
Overall, Wood remains bullish on bitcoin, noting how Ark got involved with the digital asset in 2015. Back then, she invested in the digital asset believing it could become as big as the monetary base of the US, which stood at trillions of dollars. Digital assets currently have a market valuation of $2.5 trillion, with bitcoin capturing nearly half at $1 trillion.
"This is the new bank - digital wallet - and it's going to be true in this country. It's going to be true around the world," she said at the Milken conference.
All in? she was asked. "All in," she replied.