Hong Kong Prepares For Record-Breaking Debut Of Crypto ETFs As Issuers Expect $200-$300 Million Inflow
Shayan Chowdhury29 Apr 20242 min read
Hong Kong prepares for the debut of its highly anticipated cryptocurrency exchange-traded funds (ETFs) tomorrow. With an inflow scale projected to reach between $200-300 million, these ETFs are expected to significantly surpass the first-day trading volumes seen in the United States.
Will Hong Kong Break US ETF Records?
According to Zhu Haokang, head of digital asset management and family wealth of China Asset Management, the trading volume of Hong Kong’s virtual asset spot ETF is set to surpass that of the United States. The inflow volume of the 10 US Bitcoin spot ETF issuers on January 10 amounted to $125 million. Hong Kong is expected to exceed this figure and emerge as the leading ETF issuer in terms of first-day trading volume with the three issuers.
HK ETF issuer disclosed projections for the issuance scale of Hong Kong’s Bitcoin and Ethereum spot ETFs, scheduled for launch tomorrow at UTC+8. Anticipated figures range from $200 million to $300 million, surpassing the first-day issuance scale of $125 million in the United States. Forecasts indicate a potential final market size of at least $2-3 billion, exceeding earlier estimates by US analysts.
Hong Kong’s spot crypto ETFs will differ significantly from American counterparts due to their redemption method. While US spot Bitcoin ETFs are cash-created, meaning intermediaries can’t use Bitcoin, Hong Kong’s ETFs will be in-kind created. This allows intermediaries to provide issuers with actual cryptocurrencies like Bitcoin for new ETF shares.
What To Expect Tomorrow?
On April 30, Hong Kong Stock Exchange (HKEX) anticipates the launch of crypto ETFs by three Chinese firms: China Asset Management, Bosera Asset Management, and Harvest Global Investments, via their Hong Kong subsidiaries. Analysis reveals that the Hong Kong ETF market stands notably smaller in comparison to the United States.
As of March 2024, ETFGI data indicates that the US ETF industry boasted 3,457 products across three exchanges, with assets totaling $8.9 trillion.
Bitcoin expert Willy Woo recently shared his thoughts on the upcoming launch of the Hong Kong Bitcoin ETF scheduled for tomorrow. Woo pointed out the importance of the Asian market, noting that it has more users than the US and Europe combined. This highlights how influential Asian investors are in the crypto market, despite their smaller presence in terms of land area.
However, it can’t tap into Chinese investment because China has strict rules against digital assets. This means many wealthy Chinese investors won’t be able to invest in this asset class.
Despite these challenges, initial estimates suggested that Hong Kong’s spot Bitcoin ETFs could attract $25 billion. But Bloomberg analyst Eric Balchunas revised this estimate down to $1 billion, saying the initial projection was too bullish.
Balchunas believes that even $1 billion would be significant for the Hong Kong Bitcoin and Ethereum ETFs. He also highlighted that reaching this adjusted target quickly depends largely on improving infrastructure.
Also Check Out : Spot Bitcoin ETFs Set to Launch in Australia by End of 2024
