ARK Invest CEO Cathie Wood anticipates that the impending approval of a Bitcoin ETF (CRYPTO: BTC) in the U.S. could significantly alter the dynamics of the crypto market, particularly impacting the Grayscale Bitcoin Trust (OTC:GBTC).

What Happened: Talking to CNBC, Wood suggested that GBTC’s dominance in the crypto market could be challenged by a U.S Bitcoin ETF. Such a product, if approved by the Securities and Exchange Commission (SEC), would be a direct competitor to GBTC, offering institutions a new avenue to gain exposure to cryptos.

“We had to own a security, so the only way we could [buy into bitcoin] … was through GBTC and that became the most liquid way to gain exposure,” Wood recalled.

“We think that’s going to change completely. There are going to be lot more liquid ways to gain exposure when we see some of these approvals,” she added.

Several firms, including ARK Invest in partnership with 21 Shares, are in the queue awaiting the SEC’s green light to launch a Bitcoin ETF. Despite similar products existing in Canada and Europe, this would be the first such ETF in the U.S. Wood also expressed hope about a potential surge of new investors into the crypto market following ETF approval but warned of possible profit-taking if the market cools down post-launch.

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In the meantime, ARK Invest has sold $6 million worth of GBTC shares, a move Wood describes as routine profit-taking.

Why It Matters: The SEC’s stance on Bitcoin Spot ETFs has reportedly changed, according to Wood. Earlier, she noted that initial filings for such an ETF were swiftly rejected by the SEC. However, recent interactions between ARK Investment and the SEC suggest a shift in attitude, fueling optimism for future approvals.

This change in the SEC’s approach, combined with the potential approval of a Bitcoin ETF, could indeed reshape the crypto investment landscape. While it could pose a challenge to existing trusts like GBTC, it could also draw in a new wave of investors, thus driving the crypto market forward.

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Illustration by Benzinga using photo courtesy of Ark Invest.