Hong Kong regulators recently approved applications for bitcoin and ethereum exchange-traded funds, but Bloomberg ETF analyst Eric Balchunas predicts the local ETF market may not perform as well as the US due to the current lack of big players and the possibility of high fees.
According to Balchunas, Hong Kong's bitcoin and Ether ETF market may generate $500 million in inflows, which is small compared to the more than $15 billion for BlackRock's spot bitcoin ETF product in the US alone. USA.
Hong Kong btc Spot ETF Smaller Than US
On April 15, the Hong Kong Securities and Futures Commission (SFC) granted in-principle approval for bitcoin and ethereum spot ETF products from China Asset Management, Harvest Global Investments and Bosera Asset Management in partnership with HashKey Capital.
While the spot cryptocurrency approvals are a major milestone for Hong Kong, which is determined to position itself as a central hub for digital assets, there is speculation that the city-state may not witness large inflows like in the United States.
Eric Balchunas, Bloomberg ETF analyst, in a twitter.com/EricBalchunas/status/1779867078603718970?t=R8M1UbYYhTR6mQ1lFufm5Q&s=19″ data-wpel-link=”external” target=”_blank”>cheeppredicted that the Hong Kong ETF market could see an inflow of $500 million, debating another prediction that estimated $25 billion.
According to Balchunas, key factors such as the absence of major players in the Hong Kong ETF market and the possibility of these issuers charging high fees could hamper demand for the products.
ETF analysts added that potential local issuers are small compared to the US giants. The United States has financial giants such as the world's largest asset manager, BlackRock, and Fidelity, which has almost $5 trillion in assets under management (AUM).
In terms of fees, between one and two percent, as Balchunas speculates, may prove uncompetitive for Hong Kong bitcoin ETF issuers, while US ETF providers offer 0.25%. or less.
As previously reported by CryptoPotatoGrayscale, which currently charges a 1.5% management fee on its spot bitcoin ETF, said there would be a reduction over time, following the maturity of the ETF market.
The company's management fees are significantly higher than those of its rivals and it has seen continued capital outflows compared to competitors such as BlackRock, which continues to post profits.
When to spot ethereum ETF in the United States?
Meanwhile, Hong Kong's bitcoin ETF spot market could see a rebound if larger players participate and mainland Chinese investors are allowed access to the product, according to Balchunas.
Although the US bitcoin spot ETF market is larger than Hong Kong, the latter may have an advantage over the United States, being one of the first jurisdictions with an approved spot ethereum ETF.
Since green-lighting nearly a dozen applications in January 2024, the U.S. Securities and Exchange Commission appears reluctant to give its approval to a similar product that tracks the price of Ether, the second-largest cryptocurrency by market capitalization.
BlackRock, Grayscale, Frank Templeton, Fidelity and Invesco are among the applicants for an Ether spot ETF. The US regulator recently delayed its decision on BlackRock and Fidelity's ethereum filings after earlier delays in other applications.
However, some analysts believe that SEC approval of an ethereum spot ETF in the United States may not occur in 2024.
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