In simple terms, the Hong Kong Securities and Futures Commission (SFC) has given its blessing for the launch of Bitcoin and Ethereum spot exchange-traded funds (ETFs). This is an important development for the cryptocurrency industry in the region.
Although the approval brings enthusiasm, Eric Balchunas from Bloomberg, as a senior ETF analyst, expressed a more measured perspective on the possible funds flowing into the recently authorized market.
According to Balchunas’ prediction, Hong Kong Bitcoin ETFs are likely to trail substantially behind US Bitcoin ETFs in terms of trading volume. The US counterparts have already surpassed the $200 billion mark since they started trading in January.
Obstacles For Hong Kong’s Bitcoin ETFs
Approval of Bitcoin ETFs in Hong Kong is certainly good news, but Balchunas cautioned on social media against getting overly excited about it.
Based on Blachunas’ assessment, Bitcoin ETFs have been given the green light to emerge in the market, but they haven’t started trading yet. There are whispers of a forthcoming debut within the next week to dodge clashing with the Dubai conference.
Balchunas expressed skepticism towards overly optimistic projections of $25 billion in new investments for the Hong Kong market. Instead, he predicted a more modest inflow of around $500 million. Here are some justifications he offered for his conservative perspective:
To begin with, the Bitcoin ETF market in Hong Kong is not large, with a value of approximately $50 billion. Furthermore, Chinese residents encounter limitations when it comes to buying these Bitcoin ETFs directly, which reduces their potential interest.
Another way to phrase this: Two key points to note: Firstly, Hong Kong’s three approved ETF issuers – Bosera, China AMC, and Harvest – are relatively small in comparison to industry giants such as BlackRock. Secondly, the lack of major players in the market could potentially make it challenging for these ETFs to draw substantial investments, according to Balchunas’ assessment.
In addition, Balchunas noted that Hong Kong’s underlying ecosystem is considered less liquid and effective than the US market. Consequently, these ETFs might have larger price differences and discounts, potentially discouraging prospective investors.
In conclusion, the cost of investing in Hong Kong ETFs is approximated to be around 1% to 2%. This fee is noticeably greater than the affordable fees commonly found in the US stock market. According to Balchunas’ assessment.
Just to be clear, all this is clearly positive for bitcoin as it opens up more avenues to invest, I’m just sayying its child’s play vs US. Also long-term some of this could go away: more liq, tighter spreads, lower fees and bigger issuers involved. But short/medium term we have more moderate expectations. That’s all.
Limited Impact
James Seyffart, a colleague of Balchunas at Bloomberg, made a striking contrast between the markets in Hong Kong and the United States, emphasizing their significant differences in scale and influence.
On X’s post, Seyffart highlighted that the value of Bitcoin ETF assets listed in the US surpasses the combined worth of all ETFs based in Hong Kong. The US ETF market, which is around $9 trillion, significantly dwarfs Hong Kong’s $50 billion ETF market.
Moreover, the Mainland China ETF market is approximately $325 billion in size, making it much larger than the Hong Kong ETF market. Seyffart pointed out that while Hong Kong ETFs may hold promise for the future, they are unlikely to reach the same massive scale as a launch on US exchanges. In summary, Seyffart underlined the significant disparity between the two markets.
While these ETFs have significant potential in the Asian market as a means of accessing digital assets through traditional financial channels, it’s important to note that their influence is not expected to match the impact of a launch on US exchanges.
The leading cryptocurrency currently costs around $63,500, representing a small drop of more than 1% in recent hours. Previously, it spiked above $67,000 due to excitement surrounding potential ETF approvals in Hong Kong.
Read More
- BTC PREDICTION. BTC cryptocurrency
- LUNC PREDICTION. LUNC cryptocurrency
- Best Goomba Characters In Mario Games, Ranked
- MNT PREDICTION. MNT cryptocurrency
- ETHW PREDICTION. ETHW cryptocurrency
- SOL PREDICTION. SOL cryptocurrency
- Ethereum (ETH) Crashes Dramatically, What’s Next? Solana (SOL) Can Still Reach $200, XRP Struggling Before $0.63 Test
- I Physically Need WWE 2K25’s Showcase to Feature The Bloodline
- Rumor: One of the Weirdest Games of 2014 Could Be Making a Comeback
- ALPINE PREDICTION. ALPINE cryptocurrency
2024-04-16 08:11