Hong Kong finds out Bitcoin and Ethereum ETF can start trading by the end of April, the analyst behind 10x research told Decrypt.
“While no trading date has been set, expectations are for April 30,” stated the founder of 10x Research, Markus Thielen. He also writes research reports for multiple platforms, like Singapore-based trading platforms.
Hong Kong gives certain approvals for Bitcoin and Ethereum ETFs managed by China Asset Management, Harvest Global, Bosera, and HashKey, respectively.
After the US approved spot Bitcoin, we observed a certain increase in demand of ETFs in the first month, which resulted in the most bullish market of crypto. According to Thielen, the success of Hong Kong depends on China, whether they purchase ETFs or not.
Southbound Stock Connect: Chinese Access to Bitcoin and Ethereum ETFs
The southbound stock of the Shanghai Stock Exchange is a collider that provides access to qualified mainland Chinese investors in Hong Kong. This connection allows them to trade securities listed on the Hong Kong exchange. If the trade exceeds its daily quota of ¥42 billion, the system will reject it
Through this program, Chinese investors can buy up to ¥500 billion in Hong Kong stock annually. According to Thielin, “During the last three years, the annual spare quota was HK$100 billion to HK$200 billion ($15 billion to $25 billion).”
“If Chinese investors could buy,” he added, “this is how much mainland investors could allocate—as an upper limit.”
According to Thielin, for at least six months, ETFs will not become part of Southbound, as the future is unpredictable.
“Most market participants expect Chinese mainland investors to be unable to buy these products and that they will not be added to the southbound connect program,” Thielin explained
“Currently, Hong Kong ETFs need to have been listed for six months, but regulation could always change.”
Thielen suggests that as China’s property worries and a long-standing weakness in the stock exchange continue, the country will move towards Bitcoin to increase its assets.
“Although some forms of Bitcoin activities are banned in China, the ban might be primarily motivated by the fear of social unrest due to scams, illegal capital raising, etc,” Thielin explained. “A regulated product like the Bitcoin and Ether ETFs is more favorable.”
As China bans Cryptocurrency and its mining in 2021, the country has remained the center of attention in the crypto world. In 2023, the world’s leading crypto exchange Binance processed $90 billion of Chinese in a single day, making it 20% of the worldwide volume.
After opening its doors to retail investors and approving crypto ETFs, Hong Kong positioned itself as a crypto hub, slated to serve as a testing ground for China.
“Nothing happens in Hong Kong without China’s blessing—not even a raindrop, ” Thielen explained. “So when the two leading financial market authorities (HKMA and SFC) approve Bitcoin and Ethereum ETFs, there must be a conscious decision and a calculation around the impact this might have.”
As per his thoughts, this will not boost the market much because of the cultural difference.
“ETFs have limited success in Asia as investors like to take direct/concentrated bets instead of buying a basket of something,” said Thielen. As the ETF is a single entity, it is much closer to a big bet.
