Yona Gushiken
The recent approval of Bitcoin and Ethereum exchange-traded funds (ETFs) in Hong Kong stirred anticipation within the cryptocurrency community. However, Bloomberg ETF analyst Eric Balchunas offered a tempered perspective, shedding light on the potential challenges and limitations that may temper initial expectations.
Hong Kong’s regulatory green light for Bitcoin and Ethereum ETFs marks a significant step towards legitimizing digital assets within the financial ecosystem. This move underscored the special administrative region of the People’s Republic of China’s commitment to embracing innovation and positioning itself as a global hub for cryptocurrency investment.
Balchunas, a Bloomberg ETF analyst, provided insights into the implications of Hong Kong’s ETF approval. He highlighted several factors that could impact the performance and adoption of these ETFs.
Balchunas noted that while the approval signals positive growth for Bitcoin and Ethereum investment avenues, the expected inflows may not reach astronomical levels. With rumors swirling around the imminent launch of spot Bitcoin ETFs in Hong Kong, Balchunas cautioned against overly optimistic projections.
He suggested that despite estimations of potential inflows reaching $25 billion, a more realistic expectation may hover around $500 million. Balchunas also outlined key reasons for this more modest forecast. Firstly, he pointed out that Hong Kong’s ETF market size, currently at $50 billion, coupled with restrictions barring Chinese locals from investing in these ETFs, may limit their reach.
Additionally, Balchunas highlighted the relatively smaller size of the approved issuers – Bosera, China AMC, and Harvest – compared to industry giants like BlackRock. He warned of potential liquidity and efficiency challenges within the underlying ecosystem, which could lead to wider spreads and premium discounts for these ETFs.
Balchunas’ estimation of the Hong Kong Bitcoin and Ethereum ETFs appears relatively conservative compared to the outlook provided by crypto research analyst Markus Thielen. Thielen emphasized the significance of Hong Kong’s approval of spot Bitcoin and Ether ETFs managed by China Asset Management, Harvest Global, Bosera, and HashKey.
He anticipated their potential trading debut on April 30. However, Thielen also noted that their impact may be tempered compared to their U.S.-listed counterparts, given the significantly larger assets under management of US-listed Bitcoin futures ETFs compared to those listed in Hong Kong.
Despite these cautious assessments, Balchunas emphasized the positive impact of expanding Bitcoin and Ethereum investment avenues globally. While the approval signifies progress in broadening access to cryptocurrency investments, he underscored the substantial disparity between the Hong Kong and US markets. Balchunas reiterated the long-term potential for increased liquidity, tighter spreads, lower fees, and involvement of larger issuers, but suggests a more measured outlook in the short to medium term. Additionally, he noted rumors suggesting a delayed launch of the approved ETFs to avoid direct competition with a prominent conference in Dubai.
Balchunas reiterated the long-term potential for increased liquidity, tighter spreads, lower fees, and involvement of larger issuers, but suggests a more measured outlook in the short to medium term. Bloomberg’s ETF analyst noted that despite the spot Bitcoin and Ethereum ETFs receiving approval in Hong Kong earlier this week, there are rumors circulating that their launch may be scheduled for the following week to avoid direct competition with a prominent conference in Dubai.
