Hong Kong Bitcoin Spot ETF drops, what impact will it have on Bitcoin price?

It is expected that Hong Kong’s first BTC spot ETF will be unveiled soon.

Written by Kayle, IQ Tax Bureau

The US BTC spot ETF is pending, and Hong Kong can’t wait. **On December 22, the Hong Kong Securities Regulatory Commission issued four circulars in a row, the most significant of which was the announcement that it would approve virtual asset spot ETFs. **

BTC spot ETF is the most coveted “strong medicine” in the crypto world. Just every discussion in history will cause market climaxes one after another. Now, Hong Kong is about to open this bottle of powerful medicine, and put the world’s best-performing financial assets in the past ten years into ETFs, which will inevitably make Old Money think about it.

Many traditional funds have long been greedy for Bitcoin. However, because the risks are too high and there are no compliant entry channels, they can only watch Bitcoin soar. This is really uncomfortable, so some institutions can only If you can’t get in or out, you have to give your money to Grayscale to buy BTC; some even set their sights on Microstrategy, a listed company that has a heavy exposure to BTC, and buy its stocks like crazy, indirectly enjoying the glory of BTC.

Although the Chicago Mercantile Exchange has long listed Bitcoin futures ETF, and Hong Kong also has a futures ETF launched by CSOP, it cannot quench the thirst of the old consortium at all. After all, most public funds cannot speculate in futures, and high-risk assets such as BTC cannot be added to the investment list. But spot ETFs are different. Whether they are public funds or private equity funds, spot ETFs are conventional investment targets. Regardless of whether they contain BTC or gold, they can be sold.

Hundreds of billions of US dollars increment brings doubled growth

**As Hong Kong and the United States liberalize Bitcoin spot ETFs, BTC ETFs will directly land on traditional securities markets. Funds, family offices, and listed companies can allocate BTC in their accustomed securities software without modifying their investment scope. At a time when high-quality assets are scarce in the market, Bitcoin, as the hottest and hottest new asset, is enough to rely on the “aphrodisiac” of ETFs to become the top new investment target. **

The U.S. 401(k) pension is already ready to try. Steven T. Larsen, founder of Columbia Consulting in Spokane, Washington, said that once the U.S. SEC gives the nod to Bitcoin spot ETFs, more companies will decide to offer Bitcoin ETFs in their 401(k) product lineups.

Once huge funds like pension funds enter the market, the crypto market will see huge growth. Looking at the U.S. market alone, the current total asset management scale of the 14 spot Bitcoin ETF applicants is US$14 trillion. Even if 1% of these funds enter the market, it can bring hundreds of billions of US dollars in new funds. The size of 401(k) pension funds exceeds US$7 trillion and is also expected to bring in tens of billions of US dollars.

**Looking at the Hong Kong market, the market size of the Hong Kong Stock Exchange is nearly US$5 trillion, and the AUM of many large asset management institutions in Hong Kong reaches hundreds of billions of US dollars. Under the background of the Hong Kong Securities Regulatory Commission’s efforts to develop Web3, investing in BTC spot ETFs will become an asset. An important option for regulatory agencies, tens of billions of dollars of funds may gradually pour into BTC ETF. **

It is expected that in a few years, hundreds of billions of dollars in global funds will be injected into BTC spot ETFs. The current market value of BTC is more than 800 billion U.S. dollars, and more than half of it is controlled by long-term holders. The market circulation is limited, and hundreds of billions of dollars of funds will enter the market. , BTC is expected to double rapidly again.

Who can go to the “card table”?

The huge potential scale of virtual asset spot ETFs will undoubtedly provide huge opportunities for ETF issuers. In the United States, asset management institutions such as BlackRock and Grayscale have already taken action. Which institutions in Hong Kong can seize this wave of financial dividends?

Among funds in Hong Kong, Harvest Fund and China Asset Management are strong. The former issued the Harvest CSI 500 ETF and the latter issued the China AMC SSE 50 ETF. These two established Chinese funds have sufficient strength to issue BTC spot ETFs. However, the background of Chinese capital poses a certain constraint. Due to mainland China’s strict supervision of virtual assets such as BTC, the approval process for Chinese funds to issue BTC ETFs is blocked.

**There are currently about thousands of No. 9 license asset management institutions in Hong Kong, but traditional No. 9 license holders can only manage investment portfolios with less than 10% of the investment in virtual assets. Only after the virtual assets have been upgraded can they manage and invest in virtual assets. A portfolio with a ratio of 10%-100%. Currently, there are only a dozen institutions upgrading the No. 9 license plate, including veteran local securities firms Victory Securities, Pando Finance, EBO Capital Asia, and so on. **

** Among them, Victory Securities is active in the field of virtual assets. Not long ago, it became the first securities firm in Hong Kong to provide virtual asset transactions for retail investors. It also cooperated with EMC Labs to issue the first compliant BTC fund that accepts stablecoin subscriptions. It must not be You will miss this opportunity to “serve the table”. **

In addition, CSOP and licensed virtual asset exchange HashKey, which previously issued BTC futures ETFs, are also expected to get a share of the BTC spot ETF. As for this crypto wave in Hong Kong, exchange giants such as Binance have been silent and basically have no chance of it.

It is expected that Hong Kong’s first BTC spot ETF will be unveiled soon, and by then we will know the magic power of this “strong medicine”.