Hong Kong Spot Bitcoin and Ethereum Exchange Traded Fund (ETF) could start trading by the end of the month, said a veteran analyst at 10x Research. Decryption.
“No trading date has been set, but it is expected to be April 30th,” the 10x Research founder said. Markus Thielen. He also writes research reports for Singapore-based trading platform Matrixport, where he previously served as Head of Research Strategy.
Thielen's comments came a day after Hong Kong's announcement. conditional approval number of spot bitcoins and Ethereum ETF The applications are managed by China Asset Management, Harvest Global, Bosera, and HashKey, respectively.
the result, US approves Spot Bitcoin ETF In January, Significant increase in demand Cryptocurrency exposure has helped drive the recent bull market. But Thielen said the level of success of the Hong Kong ETF will largely depend on whether mainland Chinese investors can buy it.
Shanghai Stock Exchange's Southbound Stock Connect allows eligible Mainland investors to access eligible Hong Kong financial assets. There is a daily quota of 42 billion yen for southbound connections, and transactions will be rejected if exceeded. However, in recent years, this quota has not been achieved.
“This program allows mainland investors to purchase up to 500 billion yen ($69 billion) of Hong Kong-listed stocks per year, which equates to HK$540 billion annually,” Thielen said. Decryption. “The annual reserve allowance for the past three years has been between HK$100 billion and HK$200 billion ($15 billion and $25 billion).”
He added: “If Chinese investors can buy, mainland investors will be able to allocate this much as a ceiling.”
However, this future seems unlikely for now, as Thielen doesn't think the ETF will be part of the southbound program for at least six months.
“Most market participants expect mainland Chinese investors will not be able to purchase these products and they will not be added to the southbound connectivity program,” Thielen explained. “Currently, Hong Kong ETFs must have been listed for six months, but regulations are always subject to change.”
That said, Thielen suggested that “concerns about China's real estate” and a decade-long stock market downturn could cause the country to look to Bitcoin to diversify its assets.
“Some forms of Bitcoin activity are banned in china, the ban may be primarily motivated by fears of social unrest due to fraud, illegal capital raising, etc., Thielen said. “Regulated products like Bitcoin and Ether ETFs are better.”
in spite of China bans virtual currency trading and mining In 2021, the country continues to be at the forefront of the cryptocurrency conversation. Processed by top crypto exchange Binance in 2023 $90 billion China deal In one month, this accounted for 20% of Binance's global trading volume at the time.
Since then, Hong Kong has identified itself as Next Crypto Hub—Where to start trading individual investor And now we are approving crypto spot ETFs. experts said Decryption China may be using this territory as a “testing ground.”
Thielen added: “Without China's blessing, nothing will happen in Hong Kong. Not even a raindrop will happen.” “Therefore, when the two major financial market authorities (HKMA and SFC) approve Bitcoin and Ethereum ETFs, a conscious decision and calculation will be required to take into account the impact this may have.”
However, Thielen suggested that this may not be as bullish as many crypto enthusiasts initially thought due to cultural differences in investing.
“ETFs have had limited success in Asia because investors prefer to bet directly and centrally rather than buying a basket of something,” he said. However, in this case, the ETF represents a single asset rather than 10-100+ stocks, so it is much closer to a direct bet.
“Thus, the success rate could be much higher than other basket-time ETFs,” he added.
Edited by Andrew Hayward
The views and opinions expressed by the authors are for informational purposes only and do not constitute financial, investment, or other advice.
