Hong Kong's Bitcoin and Ethereum ETFs are about to start trading, but their success will depend on access from Chinese investors. Markus Thielen, founder of the analysis firm 10x Research, estimates that these products could attract up to $25 billion.
Hong Kong crypto ETFs, a $25 billion windfall if China plays the game
With Hong Kong's Bitcoin and Ethereum exchange-traded funds (ETFs) about to launch, experts anticipate a significant impact on the market. In an interview with our colleagues at Decrypt, Markus Thielen, founder of 10x Research, said that these ETFs could begin trading as early as April 30.
This announcement follows the conditional approval granted by the Hong Kong Securities and Futures Commission (SFC) to several ETF applications managed by major players such as China Asset Management and Harvest Global.
Despite the success of spot Bitcoin ETFs in the United States in January, Markus Thielen emphasizes that the real challenge for Hong Kong ETFs lies in Chinese investors' access to these products.
Indeed, the Shanghai Stock Exchange's Southbound Stock Connect program theoretically allows domestic investors to access Hong Kong financial assets, but regulatory hurdles could delay this opportunity.
Prospects and obstacles to overcome
Markus Thielen estimates that if Chinese investors had access to Bitcoin and Ethereum ETFs, they could allocate up to $25 billion annually, providing lucrative potential for these financial products.
However, he anticipates that it could take at least six months before these ETFs are available to Chinese investors, due to ever-changing regulations.
Although China has recently hardened its stance on cryptocurrencies, Hong Kong's opening to spot crypto ETFs could indicate a strategic shift.
According to Thielen, “ Nothing happens in Hong Kong without China's blessing, not even a drop of rain. Thus, the approval of Bitcoin and Ethereum ETFs by the Hong Kong financial authorities (HKMA and SFC) suggests a considered decision and calculation of the potential impact of these products.”
Some analysts speculate that China is using Hong Kong as a “testing ground” to gauge the impact and acceptance of Bitcoin and Ethereum ETFs before potentially allowing them on the mainland.
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