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Bitcoin ETFs in Hong Kong just ‘nickels and dimes’ next to US: Analysts

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ETF analysts welcome Hong Kong spot ETFs but see less impact in the short-term

Bitcoin ETFs

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  • The market was excited about Hong Kong spot BTC, ETH ETFs. 
  • However, analysts see less impact from the ETFs in the short term. 

The crypto market slightly recovered after the Hong Kong approval of spot Bitcoin [BTC] and Ethereum [ETH] ETFs. BTC bounced to $67K, while ETH graced $3.2K. But the top coins have since retreated lower as Middle East tensions hang in the balance. 

Market watchers have hailed the Hong Kong ETFs as a game changer. For instance, Gary Tiu, director at the digital asset platform OSL, singled out spot ETH ETF approval as leverage over the US. 

“Right now, the U.S. has not approved any spot products. So, the Hong Kong managers are certainly standing in a very good position when they launch the ETH products in Hong Kong for sure.”

Additionally, Tiu noted that more issuers will get approval in Hong Kong, driving price wars and lowering fees for the new ETF products. But Bloomberg ETF analysts disagree. 

Hong Kong’s BTC, ETH ETFs market is “tiny”

Reacting to the Hong Kong ETFs’ approval, senior Bloomberg ETF analyst Eric Balchunas stated

“Other countries adding BTC ETFs is no doubt additive, but it’s nickel-dime compared to the mighty US market.”

Balchunas’ take was based on perceived Hong Kong’s market estimates and the three approved issuers. 

For instance, the analyst estimated that market flows could hit $500 million rather than $25 billion, as others purported. 

It’s worth noting that mainland Chinese locals can’t buy the products, at least officially, because they’re illegal. Ergo, the new ETFs could experience liquidity issues and massive discounts per Balchunas. 

Additionally, with only three approved issuers, there could be less competition. So, fees for the new ETFs might range from 1% – 2%, compared to cheaper charges in the US.

Another Bloomberg ETF analyst, James Seyffart, underscored that the US ETF market is much larger than China’s. 

“The US ETF Market is almost $9 Trillion in assets — that’s trillion with a ‘T’. The entire Hong Kong ETF market is ~$50 billion. Mainland China ETFs are ~$325 billion. We’re talking literal orders of magnitude differences in size and impact.” 

In other words, even if mainland China legalizes the new ETF products in the future, they might have less flow compared to the US scene. 

The market has been excited about the potential impact of Hong Kong ETFs, and it is rumored that they will begin trading next week.

However, according to the ETF analysts, the perceived “massive” impact might need to be re-adjusted, at least in the short term. 

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Benjamin is a Telecommunication Engineering graduate who is passionate about crypto-markets and unraveling market trends. Armed with charts and patterns, he's interested in making the intricate, complex landscape of digital assets more palatable for every user.
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