Some industry insiders saw the licensing of spot Bitcoin exchange-traded funds (ETFs) in Hong Kong earlier this week—much anticipated—as a major industry milestone.Nonetheless, they caution that stronger market factors, such ongoing inflation and geopolitical risk, may obscure the positive development.
“We are delighted to witness the historic moment of the launch of Asia’s first Bitcoin spot ETF and the world’s first Ethereum spot ETF,” said Livio Wang, chief operating officer of Hong Kong-based HashKey Group, in a statement. “This will serve as a significant milestone for traditional financial institutions in Hong Kong to enter the market and provide retail users with a more convenient purchasing gateway.”
Wang added that Hong Kong spot Bitcoin ETFs offer a number of special characteristics not seen in U.S. spot Bitcoin ETFs, which were approved in January. These features include the ability to subscribe and redeem using both fiat currency and Bitcoin and stablecoins.Wang also praised Hong Kong authorities for authorizing a spot Ether ETF, pointing out that U.S. regulators had more stringent requirements.Likewise, “the introduction of these ETFs is anticipated to considerably enhance capital inflow into the digital asset market in Hong Kong,” according to Patrick Pan, CEO and chairman of OSL Exchange, who spoke with Cointelegraph.The ability of Hong Kong spot ETFs to facilitate in-kind settlement was also commended by Pan, who clarified that this form of arrangement will lead to “uninterrupted trading flows” and “enhanced market liquidity.”
The cryptocurrency exchange eToro is optimistic about Hong Kong spot ETFs as well.“Hong Kong would become the first Asian jurisdiction to have a bitcoin spot ETF, positioning itself as a rising crypto hub in Asia, as well as potentially paving the way for other neighboring countries and jurisdictions to follow suit with their own ETFs,” the exchange said in a statement.
“More potential investors and integrations into the traditional financial system could bode well for the bitcoin price.”
All eyes are now focused on Bitcoin’s halving event, eToro added in response to the news of the Hong Kong ETF.“Every investor in Bitcoin is now wondering if the market will rise to new highs due to the supply shock from the halving, or if it will fall even further and the halving turns into a sell-the-news story after all the hype, like the approval of the Bitcoin spot ETF earlier this year,” the exchange said.Some people are less optimistic about the future of the Hong Kong spot Bitcoin exchange fund.
Shanghai-based investors are prohibited from purchasing virtual assets, therefore it is likely that they will not be able to purchase Hong Kong-listed spot bitcoin and ether ETFs, according to Eric Balchunas, a Bloomberg ETF analyst.Balchunas believes that due to these restrictions on demand, Hong Kong spot Bitcoin exchange-traded funds (ETFs) will only draw in “$1 billion within two years,” a vastly smaller amount than the roughly $50 billion that U.S. spot Bitcoin ETFs now handle.
In the meantime, just one day after Hong Kong spot ETFs were permitted, Markus Thielen, founder of the Singaporean blockchain analytics company 10x Research, stated that the company “sold everything last night.”“We are increasingly concerned that risk assets, such as stocks and cryptocurrency, are on the verge of a substantial price correction,” Thielen stated.
“The primary trigger is the unexpected and persistent inflation. With the bond market now projecting less than three cuts and 10-year Treasury Yields surpassing 4.50%, we may have arrived at a crucial tipping point for risk assets.”
Since hitting an all-time high of $73,750 per coin last month, the value of bitcoin has decreased by about 20%.The digital asset saw a sharp decline on April 13 as a result of growing tensions in the Middle East.