Flows into Hong Kong's newly approved Bitcoin and Ether ETF could be hampered by regulations barring purchases by mainland Chinese investors.
Estimates vary widely on how much investment Hong Kong's new ETF will attract.
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Posted on April 15, 2024 at 3:14 PM ET.
The size of Hong Kong's upcoming Spot Bitcoin (BTC) and Ether (ETH) ETFs will likely pale in comparison to recent US funds' multi-billion BTC ETF holdings. The 11 U.S.-based ETFs have attracted about $60 billion in assets since their launch on January 11.
However, estimates vary widely as to how much Hong Kong's new products, first four These were approved by the Hong Kong Securities and Futures Commission on Monday, I'll catch you.
read more: There are currently 11 Spot Bitcoin ETFs.Here's what's best for you
Claims that a certain class of mainland Chinese investors has access to Hong Kong BTC ETFa Singapore-based financial services platform Matrixport reportedly It is estimated that these vehicles could create a huge demand of $25 billion. Matrixport said this calculation would only be possible if regulators approved the ETF without restrictions.
Most mainland Chinese investors are not allowed to invest in Hong Kong-listed ETFs, and the overall ETF market capitalization of the Hong Kong market is limited to approximately $50 billion, with trading driven by local buyers and sellers. ing.
Matrixport's prediction appears to be an outlier. Eric Balchunas, senior ETF analyst at Bloomberg, said on Tuesday that his team expects Hong Kong to be “lucky” to capture $500 million in inflows into spot BTC products.
read more: Why Spot Bitcoin ETF matters for crypto (but most don't)
Balchunas wrote in a post on It says that there is a high possibility that demand will be suppressed.
Latest news on the Hong Kong Spot Bitcoin ETF: its existence has been confirmed, but it has not been launched (yet). Rumor has it that it will be launched next week so as not to conflict with the Dubai conference. Don't expect much money to flow (some estimates were as crazy as $25 billion). I think they'll be lucky to get $500 million. Here's why:
1. Hong Kong…— Eric Balchunas (@EricBalchunas) April 15, 2024
The Hong Kong Securities and Futures Commission, which regulates ETFs, announced on Monday that it had approved Vocera Capital, China Asset Management, Hashkey Capital and Harvest Global to offer spot ETFs for Bitcoin and Ether. .
Ryan Rasmussen, senior crypto research analyst at Bitwise Asset Management, said the combined demand for BTC and ETH ETFs in Hong Kong could reach $1 billion, with the majority coming from Bitcoin. He said that.
Hong Kong regulators appear to have followed the U.S. Securities and Exchange Commission's strategy, at least to some extent, by first approving a BTC futures ETF, paving the way for an eventual spot ETF.
Impact on virtual currency prices
“We will see demand for these products and as well. [US spot BTC ETFs] “It helped push prices up, but I don't think it will have the same level of impact from a price increase standpoint, but it will definitely have a positive impact on prices,” Rasmussen said. “That brings more demand to the Bitcoin market.”
The approval of the SEC BTC ETF has driven Bitcoin prices up over 40% this year, trading in the $67,700 range at the time of publication. Bitcoin hit an all-time high of just under $74,000 in mid-March, responding to strong demand for the fund.
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Michael Dunn, president of Bitcoin derivatives exchange Bitnomial, said in a statement that Hong Kong's approval shows that “demand for physical Bitcoin remains strong.”
However, according to Dunn, this implementation could lock in the liquidity of Bitcoin transactions outside of ETFs.
“This will only perpetuate the physical BTC supply shortage that has been observed in the market since the US launched the Spot Bitcoin ETF in January,” he said.
