On April 15, Hong Kong made a major move toward establishing itself as a crypto hub by giving the green light to the first Bitcoin and Ethereum exchange-traded funds (ETFs). Nevertheless, ETF expert Eric Balchunas has dampened the widespread enthusiasm within the cryptocurrency world.
Spot Bitcoin ETF Is Live In Hong Kong
When speaking with X, Balchunas advises investors to exercise caution and not anticipate significant investments, particularly in the Bitcoin Spot ETF, following the large inflows of funds observed in the US market earlier this year.
In the analyst’s perspective, Hong Kong ETFs, although welcomed, may not bring about the major market shift some expect. One primary reason for this is the limited scale of the Hong Kong ETF market, which is approximately $50 billion. Chinese mainland investors, who have greater financial resources, are currently barred from investing in these products.
In addition, Balchunas points out potential issues with liquidity and the suboptimal performance of the city-state’s rail system. Consequently, there is a possibility that these financial products may be launched with larger price differences between buyers and sellers, contrasting the narrow spreads observed in the US market.
Given the involvement of major financial players like BlackRock and Fidelity, who have high liquidity, US-based ETF issuers are likely to maintain a competitive advantage.
BTC Price Remains Under Pressure, China Restricts Participation
To date, several applicants such as China Asset Management and Harvest Global Investments have been given the green light by the Hong Kong Securities and Futures Commission (SFC) to introduce Bitcoin and Ethereum spot ETFs. These ETFs are expected to initiate trading within approximately a week’s time.
Prior to that point, Bitcoin prices continued to decline based on the daily price chart. The cryptocurrency has dropped approximately 12% from its record highs. However, buyers hold the upper hand, with their influence extending throughout the market.
Based on information from Coinlore, Bitcoin has increased by around 120% so far this year. Analysts predict further growth in the coming weeks following the Halving event.
An unexpected approval from the city-state sets it apart as a pioneer in cryptocurrency, contrasting with China’s ban on crypto trading, staking, and mining. Despite this prohibition in China, the government advocates for emerging technologies like blockchain and AI.
Previously, President Xi Jinping identified blockchain as a significant advancement and championed its growth. Already, initiatives for digital evidence preservation and intelligent courts have begun. In parallel, China is fostering the expansion of the Blockchain Service Network (BSN) to ensure safe and regulated implementation.
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2024-04-16 05:11