Crypto Hedge Fund Arca is the Latest to Join the Crowd of Bitcoin Trust Issuers

Meanwhile, GBTC is getting sold off with premium tanking to -3.77% and -5.27% on ETHE. Still, crypto fund assets are about to cross the $50 billion mark, up 12.5x from a year ago, that too without a US Bitcoin ETF.


Arca, the cryptocurrency hedge fund, is the latest one to launch a Bitcoin Trust product, as per the filing with the US Securities and Exchange Commission (SEC) on Thursday.

This makes sense given the explosive demand for Bitcoin funds, as we saw with the debut of the first Bitcoin ETF in Canada.

With this filing, Arca has joined several other asset managers that aim to provide exposure to Bitcoin without having the investors hold the digital assets themselves. Already, a number of asset managers like Bitwise, BlockFi, OpsreyFund, and others have been racing to launch their own bitcoin investment vehicles.

The Bitcoin products will be competing with the world’s largest digital asset manager, Grayscale.

What looks like the digital asset manager’s first foray into Bitcoin offerings launches with $100,000 so far. Unlike Grayscale’s $50k minimum, Arca is taking in $25k as minimum investments.

Meanwhile, Grayscale, which has $31 billion in its Bitcoin Trust (GBTC), holding more than 3.5% of Bitcoin’s circulating supply, is getting sold off.

Currently, GBTC is trading at a negative premium, continuing to fall this week, to its latest low -3.77%, as per Bybt. The same is the case for ETHE, on which the premium is also at its lowest level of -5.27%.

“This is panic or profit-taking selling,” said Eric Balchunas, BI’s senior ETF analyst. “It’s almost like the price of GBTC is an amplified version of Bitcoin price.”

Bitcoin, along with the broad crypto market, has been experiencing a sell-off, which is continuing today as the price of Bitcoin dumps to another low at $44,000, down 24.5% from Sunday’s all-time high of $58,300.

Michael Sonnenshein, chief executive officer of Grayscale Investments, acknowledged the risk of vanishing GBTC premium in a panel for the Bloomberg Crypto Summit on Thursday.

“It’s certainly a risk, no question about it, but ultimately price discovery in GBTC every day is driven entirely by market forces,” Sonnenshein said.

Still, crypto fund assets are about to cross the $50 billion mark, up from a mere $4 billion a year ago that too without a US Bitcoin ETF. These numbers are about the same asset level as ETFs tracking the energy sectors, noted Balchunas, only to add that it still has a long way to go because it is just one-third of gold ETFs.

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“The SEC should consider approving multiple Bitcoin exchange-traded funds at the same time, in our view, after Canada's regulator gave its initial issuer a significant first-mover advantage. Pent-up demand could put a single U.S. winner well ahead of rivals. An ETF would force Grayscale to decide how to handle the world's largest Bitcoin tracker,” said Dave Nadig, Chief Investment Officer & Director of Research for ETFTrends.

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