Hong Kong’s Bitcoin and Ethereum ETF Could Earn $25 Billion—If China Plays Nice

Hong Kong Area Bitcoin and Ethereum Exchanges (ETFs) could begin trading by the end of the month, a senior analyst behind 10x Research told Decrypt.

“While no trading date has been decided, the expectation is April 30,” said the founder of 10x Research. Marcus Thielen. He also writes research reports for Singapore-based trading platform Matrixport and was previously head of research and strategy.

Thielen's comments came the day after Hong Kong surrendered. conditional confirmation For certain places Bitcoin and Ethereum ETF Apps managed by China Asset Management, Harvest Global, Bossera and HashKey respectively.

As a result The US spot has approved Bitcoin ETFs In January Increased demand Exposure to crypto assets helped fuel the recent bull run. But according to Thielen, the level of success of Hong Kong ETFs largely depends on whether mainland Chinese investors can buy them.

The Shanghai Stock Exchange's southbound stock link allows qualified Chinese investors to access qualified Hong Kong financial assets. Southbound connections have a daily quota of ¥42 billion—and trades that are exceeded will be rejected. But in recent years this quota has not been reached.

“This program allows domestic investors to buy up to ¥500 billion ($69 billion) worth of Hong Kong-listed stocks annually — or HK$540 billion a year,” Thielen said. Decrypt. “In the past three years, the annual profit quota has been HK$100 to HK$200 billion (US$15 billion to US$25 billion).

“If Chinese investors can buy, this is how much mainland investors can allocate – as an upper limit.

However, that future seems unlikely for now, as Thielen believes ETFs won't be part of the South's program for at least six months.

“Most market participants expect that Chinese mainland investors will not be able to buy these products and will not be added to the Southern Link program,” Thielen explained. “Currently, Hong Kong ETFs must be registered for six months, but the rule can always change.”

That said, Thielen pointed out that due to “China's property anxiety” and the ten-long weakness in the stock market, the country can look to Bitcoin to diversify its assets.

Although some types of Bitcoin activities Banned in China, the ban was mainly motivated by fear of social unrest due to fraud, illegal capital raising, etc.,” Thielen said. A regulated product like Bitcoin and Ether ETFs is more suitable.

even if China bans crypto trading and mining In the year In 2021, the country has been at the forefront of crypto talks. In the year In 2023, the top crypto exchange Binance was created 90 billion dollar Chinese transaction Within a month – at that time Binance accounted for 20% of the global volume.

Since then, Hong Kong has established itself as the Next crypto hub– Opening a transaction Retail investors And now crypto spot ETFs-which approval Experts said. Decrypt China may use the territory as a “testing ground”.

“Without China's blessing, nothing happens—not even a drop of rain,” Thielen added. “Therefore, when the two leading financial market authorities (HKMA and SFC) approve Bitcoin and Ethereum ETFs, there must be careful judgment and calculation as to the impact this may have.”

However, Thielen pointed out that this may not be as bullish as many crypto enthusiasts initially thought, due to cultural differences in investment.

“ETFs have had limited success in Asia as investors prefer to take direct/consolidated bets instead of buying a basket of assets,” he said. But, in this case, since ETFs represent a single asset rather than 10 to 100 stocks, it's much closer to being a straight bet.

“So the success rate is likely to be higher than other basket time ETFs,” he added.

Edited by Andrew Hayward.