Investments may not soar as previous estimates in the near and medium term.
Hong Kong may see spot Bitcoin and Ethereum exchange-traded funds (ETFs) debut following regulatory approval as early as next week. However, analysts caution that the immediate impact of these ETFs might be limited due to market size, investor restrictions, and less competitive structures compared to the US market.
According to Bloomberg ETF analyst Eric Balchunas, while approval is a positive step for crypto adoption, the launch’s impact will likely be minor compared to that of the US market.
Matrixport recently suggested that the potential approval of Hong Kong-listed spot Bitcoin ETFs could generate up to $25 billion in demand from mainland China. This projection is based on the possibility of Chinese investors gaining access through the Southbound Stock Connect program.
However, a reality check suggests a less rosy outlook. Balchunas believes this estimate to be overly optimistic, considering the nascent state of Hong Kong’s ETF market, which currently holds only $50 billion in assets.
Just to be clear, all this is clearly positive for bitcoin as it opens up more avenues to invest, I'm just sayying its child's play vs US. Also long-term some of this could go away: more liq, tighter spreads, lower fees and bigger issuers involved. But short/medium term we have…
— Eric Balchunas (@EricBalchunas) April 15, 2024
Sharing Balchunas’ view, ETF analyst James Seyffart highlighted the disparity between mainland China’s $325 billion ETF market and the US’s $9 trillion market, suggesting that while Hong Kong’s Bitcoin ETFs have growth potential, they face a steep climb to match the US market’s scale.
Yes, also @EthereanMaximus: There are more assets in US Listed #Bitcoin ETFs than there are assets in EVERY single ETF listed in Hong Kong. Yes it could be a big deal down the line. But its a whole different animal.
The US ETF Market is almost $9 Trillion in assets — that's…
— James Seyffart (@JSeyff) April 12, 2024