Crypto winter? Try Crypto Ice Age. The fallout from FTX’s collapse has made an already dour year for crypto that much worse. The news dropped the Grayscale Bitcoin Trust (GBTC) to a record discount, offering investors a crypto contrarian ETF play via the ARK Next Generation Internet ETF (ARKW), which took advantage of the 42% discount Monday adding more than 315,000 shares.
Certainly, the situation for FTX itself is cataclysmic. But Bitcoin futures have surged despite the news, with the CME Group reporting a 42% increase in open interest contracts for the flagship cryptocurrency as of November 11.
This isn’t even the most bearish moment so far this year for crypto according to the Crypto Fear and Greed Index, which is calculated based on $BTC price action, volume, momentum, and Bitcoin’s place compared to other cryptocurrencies. While the index sits at 22 right now – “extreme fear” – it had fallen as low as six in late June.
Cathie Wood’s ARK suite of ETFs emphasizes innovation, and this isn’t the first time this year they’ve bought crypto exposures at a discount, with the flagship the ARK Innovation ETF (ARKK) having bought Coinbase (COIN) stock at a low point for that platform last week amid the FTX drama.
There may be other structural reasons for a contrarian approach to crypto – despite the ongoing partisan drama in Congress, U.S. politicians in both parties and Americans themselves still see a place for crypto in finance’s present and future.
ARKW currently holds GBTC at 4.4%, having added more than $2 million worth of GBTC to its portfolio. GBTC’s price has increased 5.75% at press time Tuesday despite dropping 6.3% over the last five days. The ETF has seen a spike in performance itself, from -27.8% in three-month returns to 5.1% for performance over one month.
Charging 83 basis points, ARKW invests in companies that may benefit from e-commerce, AI, mobile, and cloud computing advances. The strategy offers an interesting opportunity to make a crypto contrarian ETF play for those investors looking to buy low and buck the market at a discount.
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