Hong Kong spot Bitcoin ETF approval draws praise and caution from industry players

Some experts view the recent approval of Bitcoin ETFs in Hong Kong as a major achievement for the cryptocurrency industry. Yet, others caution that potential market challenges, including ongoing inflation and geopolitical tensions, may outweigh the positive impact of this development.

“Livio Wang, COO of HashKey Group in Hong Kong, expressed great joy over the groundbreaking event of the debut of Asia’s inaugural Bitcoin spot ETF and the world’s initial Ethereum spot ETF. This development marks an important step for conventional financial institutions in Hong Kong to join the market and offers a more accessible buying option for individual investors.”

Simultaneously, Wang outlined that Hong Kong’s Bitcoin ETFs, unlike their U.S. counterparts approved in January, come with distinct characteristics. Investors can subscribe and redeem using fiat money or even Bitcoin and stablecoins directly. Furthermore, Wang praised the approval of a spot Ethereum (ETH) ETF in Hong Kong, which has encountered more regulatory challenges in the U.S.

In the same manner, according to Patrick Pan, CEO and chairman of OSL Exchange, the introduction of these ETFs is believed to bring about substantial investment into Hong Kong’s digital asset market. Moreover, Pan commended the unique feature of Hong Kong’s spot ETFs that enables in-kind settlement. Consequently, this attribute will ensure seamless trading activities and improve overall market liquidity.

eToro crypto exchange is optimistic about the future of Hong Kong’s Bitcoin spot ETFs. By being the first Asian region to introduce such an ETF, Hong Kong could establish itself as a significant player in the Asian cryptocurrency market. Moreover, it might encourage other nearby countries and jurisdictions to develop their own Bitcoin spot ETFs. (Source: eToro’s statement)

“More potential investors and integrations into the traditional financial system could bode well for the bitcoin price.”

After the announcement about the Hong Kong Bitcoin ETF, eToro expressed that attention has shifted towards Bitcoin’s Halving event. The exchange questioned if the price will surge once more to new record highs due to the immediate reduction in supply from the halving, or if it may drop further and the halving will turn out to be a sell-event following all the anticipation, much like the rejected Bitcoin spot ETF approval earlier this year.

Others are not as enthusiastic about the prospects of the Hong Kong spot Bitcoin ETF.

In simple terms, Eric Balchanus, an analyst at Bloomberg for Exchange-Traded Funds (ETFs), stated that investors from mainland China are unlikely to be able to purchase Hong Kong-listed ETFs tracking bitcoin and ether due to restrictions that prevent them from investing in virtual assets. As a result, Balchunas estimates that the total assets of these Hong Kong Bitcoin ETFs will only reach $1 billion within the next two years, significantly less than the approximately $50 billion currently managed by their counterparts in the United States.

Markus Thielen, founder of blockchain analysis firm 10x Research based in Singapore, announced on the same day following Hong Kong’s approval of spot ETFs that his company had sold all its risk assets (stocks and crypto) the previous night. Thielen expressed his apprehension, stating, “We are increasingly worried that risk assets may experience a substantial price drop.”

“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 reaching an all-time peak of $73,750 per unit on March 14th, Bitcoin has experienced a significant decrease in value, amounting to approximately 20%. This downturn can be attributed to heightened conflicts in the Middle East, which occurred around April 13th.

Hong Kong spot Bitcoin ETF approval draws praise and caution from industry players

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2024-04-17 19:16