The Bitcoin and Ether spot ETFs issued by multiple institutions in Hong Kong have obtained the Hong Kong Securities and Futures Commission’s preliminary approval today. Many media outlets consider this news to be a significant positive for the cryptocurrency market. However, Eric Balchunas, an ETF analyst at Bloomberg, believes that the estimated inflow of funds for the Hong Kong Bitcoin spot ETF may only be $500 million, which is less than 1/25th of the size of the US Bitcoin spot ETF market.
The specific reasons are as follows:
1. Hong Kong’s ETF market is relatively small, with only $50 billion.
2. The approved issuers (Bosera, Huatai, and CSOP) are relatively small in size, not on the level of large institutions like BlackRock.
3. The liquidity/efficiency of the underlying ecosystem (such as Hong Kong’s domestic exchanges and other service providers) is lower, which may result in larger price spreads for the ETF.
4. Transaction costs may be as high as 1-2%, much higher than most Bitcoin spot ETFs in the US.
In addition, Molly, who previously served as the head of market at Hashkey Hub, also commented on this matter.
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