Bloomberg analyst predicts an insignificant inflow of funds into Hong Kong crypto ETFs

What’s new? Bloomberg analyst Eric Balchunas has commented on the approval of spot exchange-traded funds (ETFs) based on bitcoin and Ethereum by the Hong Kong regulator, doubting that these products will be able to attract a large volume of funds. He specified that the local ETF market is very small and is estimated at only $50 billion, and among the issuers there is no really large investment company comparable to BlackRock.

Источник: Twitter.com

What else is known? The Hong Kong Securities and Futures Commission (SFC) has approved applications from China Asset Management, Harvest Global Investments and Bosera Asset Management, while trading in crypto fund shares has not yet begun. Balchunas, citing sources, noted that this should be expected next week.

The analyst called predictions of $25 billion in inflows into Hong Kong ETFs “insane,” and added that even $500 million in inflows for these products could be called a stroke of luck, with a likely combined result for BTC and ETH funds.

Seeking to substantiate his point, Balchunas noted that the local financial ecosystem is not highly liquid and efficient, as a result of which these ETFs are likely to have wide spreads and unit discounts against the underlying cryptocurrencies.

In addition, management fees in Hong Kong can reach 1-2%, while in the United States, fees at issuers of spot BTC ETFs mostly do not exceed 0,2-0,25%. Considering these factors, the analyst summarized that the approval of crypto funds in other countries certainly brings additional funds and positively affects cryptocurrency, but this impact is insignificant compared to flows in the powerful US market.

However, he added that such a moderate outlook affects the short to medium term. Going forward, the shortcomings of the Hong Kong market could be addressed, which would increase inflows.

Spot Ethereum funds are not yet approved in the US, trading in similar bitcoin products began on January 11. Since then, the total inflow to them amounted to $12,5 billion, and issuers have accumulated under management coins worth more than $53 billion. The stable outflow among the 11 products shows only GBTC, whose shares before conversion from a trust to a bitcoin fund were traded at a discount, and after conversion are subject to a fee of a record 1,5%.