Hong Kong ETFs: What to Expect
Hong Kong is getting ready to launch its first Bitcoin (BTC) and Ethereum (ETH) ETFs.
Hong Kong is getting ready to launch its first Bitcoin (BTC) and Ethereum (ETH) ETFs. The Hong Kong Securities and Futures Commission has approved firms like Bosera Capital, China Asset Management, HashKey Capital, and Harvest Global to manage these ETFs. Although this is a big step for Hong Kong's financial market, the amount of money expected to flow into these ETFs might be smaller compared to what happened in the U.S.
In the U.S., 11 Bitcoin ETFs were launched and they quickly attracted almost $60 billion in assets. However, the estimates for Hong Kong's new ETFs are not as high. Some are optimistic, like Matrixport, which thinks these new ETFs could bring in as much as $25 billion, but only if mainland China investors, who are currently not allowed to invest, get access. Most of the time, ETFs in Hong Kong draw around $50 billion in total, mainly from local buyers and sellers.
Eric Balchunas from Bloomberg believes that Hong Kong might only see about $500 million coming into its Bitcoin ETFs. He points out several reasons for this, such as the fact that Chinese investors can't buy these ETFs, the smaller size of the issuing companies, the fees which are likely to be between 1% and 2%, and the wide price spreads.
Ryan Rasmussen from Bitwise Asset Management thinks that the demand for Bitcoin and Ethereum ETFs in Hong Kong could reach $1 billion, with most of that demand likely going towards Bitcoin. He also mentioned that these ETFs will probably help increase Bitcoin's price, but not as dramatically as in the U.S. where Bitcoin's price went up by over 40% this year due to ETF-related demand.
Michael Dunn, president of Bitnomial, pointed out that these ETFs could make it harder to find Bitcoin available for trading outside of ETFs. He said that there's already a shortage of available Bitcoin, and these new ETFs will keep that demand high.
In short, Hong Kong's launch of Bitcoin and Ethereum ETFs is an important development, but the actual impact and the amount of money it will attract could be quite different from the U.S. experience due to different rules and market conditions.