Hong Kong Spot Bitcoin ETFs Won’t See Much Inflows, Says Bloomberg Analyst

Earlier today, the Hong Kong Securities and Futures Commission (SFC) approved spot Bitcoin ETFs and spot Ethereum ETFs that would soon be available for trading in two weeks from now. The development has created a major uproar in the crypto community showing a wider acceptance of crypto investment products. However, the major question in everyone’s mind is will these Hong Kong spot Bitcoin ETFs drive similar inflows to their US counterparts?

Bloomberg Analyst Doesn’t Expect Much Inflows in HK Bitcoin ETFs

Bloomberg’s ETF strategist, Eric Balchunas, offered insights into the anticipated flows of Bitcoin ETFs in Hong Kong, suggesting that expectations may be overly optimistic.

Balchunas indicated a modest outlook, estimating potential flows to be closer to $500 million rather than the speculated $25 billion. He outlined several reasons for this conservative projection:

1. The Hong Kong ETF market is relatively small, with only about $50 billion in total assets, and local Chinese investors may face restrictions in accessing these ETFs.
2. The approved issuers, including Bosera, China AMC, and Harvest, are relatively small players compared to industry giants like BlackRock.
3. The ecosystem supporting these ETFs may lack liquidity and efficiency, potentially leading to wider spreads and premium discounts.
4. The fees associated with these ETFs are expected to be between 1-2%, significantly higher than the low-cost fees typically found in the US market.

Balchunas emphasized that while the addition of Bitcoin ETFs in other countries is positive, it pales in comparison to the vast US market in terms of impact.

Latest on HK spot Bitcoin ETFs: They have been approved to exist but not launch (yet). Rumor has it launching next wk so to not compete w Dubai conf. Don't expect a lot of flows (I saw one estimate of $25b that's insane). We think they'll be lucky to get $500m. Here's why:
1. HK…

— Eric Balchunas (@EricBalchunas) April 15, 2024

Balchunas emphasized the positive implications of Bitcoin ETFs, noting that they provide additional investment avenues for Bitcoin. However, he underscored that compared to the US market, the impact may be relatively small. He also pointed out that over the long term, improvements such as increased liquidity, tighter spreads, lower fees, and involvement of larger issuers could mitigate these limitations.

Analysts Increase Bitcoin Price Targets to $650,000

Bitcoin analyst Willy Woo predicts that with the introduction of new Bitcoin ETFs, price targets could reach $91k at the bear market bottom and $650k at the bull market top, once ETF investors have fully deployed their assets according to asset manager recommendations. Despite these projections, Woo considers these figures to be conservative, suggesting that Bitcoin could surpass the market capitalization of gold once ETFs have fulfilled their role.

The new #Bitcoin ETFs brings price targets of $91k at the bear market bottom and $650k at the bull market top once ETF investors have fully deployed according to asset manager recommendations***.

These are very conservative numbers. #Bitcoin will beat gold cap when ETFs have…

— Willy Woo (@woonomic) April 15, 2024