VanEck Director of Digital Assets Gabor Gurbacs stated that Hong Kong Bitcoin ETFs have a strong backing from China, hinting inflows through Chinese wealth.

STORY HIGHLIGHTS

• Hong Kong Bitcoin ETFs don't face a GBTC like fund for major outflows.
• Analysts remain bullish about inflows coming from both - Asia and West - in HK Bitcoin ETFs.
• VanEck Director Gabor Gurbacs Says HK Bitcoin ETFs have strong backing from China.

After a long wait, the Hong Kong Bitcoin ETFs have finally gone live for trading setting up high expectations among investors. Interestingly, the launch of the Hong Kong Bitcoin ETFs comes at a time when the US Bitcoin ETFs are experiencing net outflows over the last week. Market analysts have started pointing out why one should see Hong Kong Bitcoin ETFs separately from the US products and the advantages that they bring along with them.

Key Points of Hong Kong Bitcoin ETFs

Hong Kong has embraced an in-kind ETF subscription and redemption mechanism, enabling the exchange of underlying assets for fund units and vice versa. In contrast, the US Bitcoin funds utilize a cash redemption model.
In a recent statement, Blockstream CEO Adam Back turned the spotlight on Hong Kong’s Bitcoin ETF market, set to open in just three hours. Noting the unique feature of in-kind entry and exit, which involves depositing Bitcoin to avoid artificial capital gains tax implications, Back highlights the significance of this development in expanding market accessibility and bridging time zone gaps for a more continuous spot market environment.
He expressed curiosity about the incoming capital flows and emphasized differences from counterparts like GBTC. Thus, Adam Back anticipates a distinct market landscape without the specter of bankruptcy-related selling in Hong Kong.

On the other hand, analysts have been predicting minuscule inflows for HK Bitcoin funds in comparison to the U.S. Bitcoin ETFs. According to Bloomberg Intelligence’s Rebecca Sin, Bitcoin and Ether funds in Hong Kong could accumulate $1 billion over the span of two years.
However, Han Tongli, CEO of Harvest Global, considers this estimate “too conservative.” Tongli attributes this to the broad acceptance of financial products and services in Hong Kong, appealing to investors from both the Western and Eastern markets. In contrast, he notes that the US primarily serves Western investors.
On the other hand, outflows from US spot Bitcoin ETFs have continued. The total outflows on Monday, April 29, stood at $51 million, as per data from Farside Investors.

Chinese Funds Coming to Hong Kong?

Gabor Gurbacs, the Director of Digital Assets strategy at VanEck said: “As I said many times, the East-West Bitcoin ETF competition is heating up. Hong Kong wouldn’t launch Bitcoin ETFs without China’s approval. China is determined to put up competition on institutional Bitcoin capabilities. Full nation-state adoption game theory in effect. Game on!”
Gurbacs noted that it will be intriguing to observe the various agreements China ventures into. His speculation suggests that their interests likely extend far beyond ETFs, possibly encompassing private technology, market infrastructure, spot Bitcoin, among other areas. The introduction of the Hong Kong ETF serves not only as a legitimizing tool but also as a signal indicating that involvement within the conventional framework is permissible.

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Bitcoin and Ethereum ETFs Go Live In Hong Kong, Will They Meet Expectations?

Hong Kong Bitcoin ETFs debut success depends on how investors navigate the tight regulatory market. BTC price jumps 2% on the news.

STORY HIGHLIGHTS

• Hong Kong Bitcoin ETFs allows swapping of underlying assets for fund units and vice versa.
• All Eyes Are on Chinese wealth for potential inflows into Hong Kong Bitcoin ETFs.
• The Hong Kong Stock exchange shows openness to list more crypto ETFs in the future.

The wait is finally over for Hong Kong investors as the first batch of ETFs investing directly into Bitcoin and Ethereum went live for trading in Hong Kong today. Some reports have been bullish that it would outpace the $125 million US Bitcoin ETF launch. The demand for these funds will serve as an indicator of whether the city’s endeavor to establish a tightly regulated digital asset hub is gaining momentum.
The news has pushed the Bitcoin price higher by 2% and is currently trading at $63,700 levels as of press time.

Hong Kong Bitcoin ETFs Go Live

Harvest Global Investments Ltd., the local branch of China Asset Management, along with a collaboration between HashKey Capital Ltd. and Bosera Asset Management (International) Co., have introduced Bitcoin and Ether ETFs in the city.
Rebecca Sin of Bloomberg Intelligence estimates that Hong Kong’s Bitcoin and Ether funds could accumulate $1 billion over a two-year period. However, Harvest Global’s CEO, Han Tongli, believes this projection is too conservative. He points out that financial products and services in Hong Kong are embraced by investors both in the West and the East, unlike the U.S., which primarily caters to Western investors.
Potential sources of inflows for the Hong Kong offerings include Chinese wealth held in the city, as well as activity from crypto exchanges and market makers in the Asia Pacific region. While the US Bitcoin ETFs have a single cash redemption model, the Hong Kong Bitcoin ETFs undertake a unique redemption mechanism, allowing the swapping of the underlying assets for fund units and vice versa.

Expanding Crypto ETFs Offering

The Hong Kong stock exchange has signaled its openness to a broader range of cryptocurrency exchange-traded funds (ETFs) as the city’s initial spot Bitcoin and Ether products become available. In an interview with Bloomberg, Brian Roberts, head of equities product development at Hong Kong Exchanges and Clearing Ltd., said:

“We can continue to go into the physical spot asset, maybe composite types of products, eventually getting into maybe levered and inverse types of strategies”.

According to Roberts, the first priority is to observe the progress and growth of the recent launches before considering additional opportunities in the future.
In response to inquiries about the potential inclusion of the new spot ETFs in a program permitting mainland Chinese investors to buy certain products in Hong Kong, Roberts stated that such a possibility could be explored in the future.