Ethereum is at its lowest level in three years against Bitcoin. Can Hong Kong ETH ETFs be a game changer?
China launches its Bitcoin & Ethereum ETFs
Hong Kong gave the green light this Monday to several Bitcoin and Ethereum ETFs. The funds affected are China Asset Management, Harvest Global, Bosera and HashKey.
Major investment fund China Asset Management has received approval in principle from the Hong Kong Securities and Futures Commission (SFC), but the date for the official launch of its ETFs is not yet known.
The arrival of Chinese ETFs bodes well given the 60% appreciation of bitcoin since the launch of their American counterparts. But will the volumes rival those of BlackRock and Fidelity? All American ETFs have already attracted more than 12 billion dollars in net.
As we pointed out previously: “All Hong Kong ETFs are worth $450 billion, compared to more than $6.4 trillion in the United States…”
In other words, if these proportions are respected, we should expect an increase of around 7% in the volumes of bitcoins absorbed by ETFs.
However, it is possible that the demand will come as a surprise given that the Chinese have been weaned off bitcoins since the 2021 “ban”. Exchanges allowing the purchase of bitcoin are in fact prohibited in mainland China.
Hong Kong will act as a decompression valve. It is therefore not impossible that the volumes are significant. Especially since the Shanghai stock market, which has been sluggish for several years now, is offering starving returns.
Breath of fresh air for Ethereum?
The chances of the SEC authorizing an Ethereum ETF are extremely slim. Remember that Grayscale had to win its case against the SEC for the Bitcoin ETF to see the light of day. However, no legal proceedings are underway regarding Ethereum ETFs.
Worse, the SEC is closely interested in possible embezzlement by the Ethereum Foundation, located in Switzerland. Suffice to say that the probability of an Ethereum ETF is currently very slim on the United States side.
Bloomberg Intelligence analysts who predicted the approval of Bitcoin ETFs believe Ethereum ETFs will not be so lucky. At least not right away. They cite in particular the lack of consultation between the SEC and investment funds.
“We now believe that these ETFs will finally be refused on May 23”wrote James Seyffart, ETF analyst at Bloomberg Intelligence. He and his colleague Eric Balchunas previously gave a 35% chance for approval in May.
Hence the much more laborious rise of ETH which does not benefit from the billions of Wall Street. ETH has lost more than 40% against Bitcoin since the transition to Proof of Stake.
That is to say an average fall of almost 3% per month, bringing it to its lowest level in three years compared to Bitcoin:
In short, ETH could fall less quickly against Bitcoin thanks to these new Chinese ETFs. But once again, Hong Kong is small compared to New York.
Don’t miss our article: Bitcoin vs Ethereum.
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