Folks in Hong Kong are excitted about the region giving the green light to spot Bitcoin and Ethereum exchange-traded funds (ETFs). However, some experts are saying investors shouldn’t go too crazy over these new crypto investment products. Eric Balchunas, a well-known ETF analyst at Bloomberg, thinks these Hong Kong Bitcoin ETFs may only bring in around $500 million from investors. That’s just a tiny drop compared to the billions pouring into the Bitcoin ETFs already trading in the United States.
Analysis of Hong Kong’s Crypto ETF Landscape
Why such a low prediction? Well, Balchunas laid it all out in a Twitter thread. First off, the whole ETF market in Hong Kong is really small, worth only $50 billion. That’s nothing next to the massive $9 trillion ETF market in the U.S.
On top of that, the three companies allowed to issue these crypto ETFs – Bosera, China AMC, and Harvest – are basically not heavyweight titans compared to BlackRock, , raising questions about their ability to attract significant capital inflows.
Balchunas also pointed out that Hong Kong’s crypto trading setup might not be up to snuff. He thinks these new ETFs could face lousy trading conditions like wide price spreads and premiums/discounts that make them less appealing to investors. Plus, their fees are probably going to be way higher than the dirt-cheap U.S. options, maybe 1-2% compared to just a few pennies per trade.
While having more ways to get into crypto is good news, Balchunas says the impact of Hong Kong’s Bitcoin ETFs will be just a drop in the bucket next to the huge U.S. market. His Bloomberg buddy James Seyffart backed him up, saying there’s more money just in the U.S. Bitcoin ETFs than in every single ETF trading in Hong Kong combined.
Still, crypto traders are feeling pretty pumped about this Hong Kong news. Santiment, one of the major cryptocurrencies analytics firms, has reported that some positive sentiment occurred although it led a slight decline in Bitcoin’s price by 4.5% at first, which could be an indication that the market was “buying rumours and selling news”.
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