HK’s Ether, Bitcoin ETFs may Struggle to Reach $500 Million

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In Hong Kong, there’s been a lot of buzz following the approval of three new Bitcoin and Ether ETFs (Exchange-Traded Funds). Crypto fans are thrilled about this development. But, Eric Balchunas, a senior ETF analyst at Bloomberg, urges caution against overzealous anticipation.

In a recent article, Balchunas cautions against the excessive excitement surrounding these ETFs. Contrary to the predicted inflow of $25 billion, he believes the actual inflows will be significantly less. “I’ve seen an estimate of $25b that seems unrealistic to me. Our forecast is closer to $500 million.”

The most recent update on Hong Kong’s Bitcoin ETFs: They have been given the green light to exist but haven’t launched yet. There are whispers of a launch coming up next week to avoid clashing with a conference in Dubai. However, do not be surprised if the inflows are limited. I’ve heard an extravagant prediction of $25 billion, which seems unrealistic to us. Our estimation is more modest, around $500 million. Here’s why:
1. The regulatory approval for Hong Kong Bitcoin ETFs has been granted, but they have not yet commenced trading.
2. There are rumors of a launch taking place next week to avoid competing with an upcoming conference in Dubai.
3. Skepticism surrounds the potential inflows, with some estimates reaching as high as $25 billion. However, we believe a more realistic figure would be around $500 million.
Reason for this estimation:
1. Hong Kong’s Bitcoin ETF market is still in its infancy and may not be able to handle such large inflows at this time.
2. The regulatory framework for Bitcoin ETFs is still being established and could change, potentially impacting the size of the market.
3. Competition from other markets, such as the United States, could also limit the potential inflows into Hong Kong’s Bitcoin ETFs.

— Eric Balchunas (@EricBalchunas) April 15, 2024

The Hong Kong ETF market is much smaller than prominent markets such as the US. Furthermore, these ETFs are off-limits to individual Chinese investors, thereby hindering their expansive influence.

In other words, Balchunas warns that despite the importance of the approved crypto ETFs, the effects might not be as groundbreaking as some people expect.

Balchunas pointed out that the three potential ETF creators were much smaller compared to “giant” asset management companies like BlackRock, which manages over $9 trillion in assets.

Stat of the Day: US spot bitcoin ETFs have more assets than the entire HK ETF market.

— Eric Balchunas (@EricBalchunas) April 15, 2024

In a recent update, Balchunas noted that the value of U.S. bitcoin exchange-traded funds (ETFs) exceeds the total assets of all Hong Kong ETFs.

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2024-04-16 09:24