• Sun. Jun 23rd, 2024

Hong-Kong And U.S. Cryptocurrency ETFs Records Differing Outcome After SEC Approval

Maria Bartiromo

ByMaria Bartiromo

May 25, 2024

The United States Securities and Exchange Commission (SEC) recently approved spot cryptocurrency Exchange-Traded Funds (ETFs), causing an uproar in the financial markets and producing contradictory outcomes in the US and Hong Kong.

Spot Bitcoin ETFs have seen significant inflows in the US, unlike their Hong Kong counterparts, which have encountered more turbulence. With this cash infusion, investors express their great faith in Bitcoin’s increasing acceptability as a mainstream asset.

Grayscale Investments has made a U-turn, dropping it’sits earlier application to be part of the proposed Ethereum-based futures ETF. In his speech addressing the development, Michael Sonnenshein, Grayscale Investments CEO, said that the company will shift it’sits concerns to converting its Ethereum trust to a spot exchange-traded product.

Reports from Hong Kong say that the country’s Ethereum ETFs and Bitcoin ETFs are being boycotted, citing some political concerns about such development. Trading data from May 13th records a $39.3 million derivative loss in 24 hours. Bitcoin-pegged assets also recorded a loss of $32.7 million, while the ETF-pegged assets experienced $6.6 million in losses.

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Market Reaction and Expert Opinions Asserted, Geopolitical Tensions Affect Development

Financial commentators say there is strong demand for these products based on the early inflows into the United States spot Bitcoin ETFs. Senior ETF analyst at Bloomberg Eric Balchunas emphasized the importance of the inflows, saying, “The robust initial response to these ETFs underscores the latent demand for regulated, straightforward ways to invest in Bitcoin.”

Spot crypto ETFs have received less response in Hong Kong than in the US market. Investor uptake has yet to catch up while after these financial products were approved by regulators and launched. This indifferent reaction has been influenced by several factors.

The persistent geopolitical tensions and regulatory uncertainty in Hong Kong have tempered investor euphoria. Potential investors are apprehensive because of the rregion’sstill complex and uncertain cryptocurrency regulatory framework.

Mixed Performance and Market Sentiment As Demand for Bitcoin Increase

Strong demand and positive inflows have greeted the introduction of Bitcoin ETFs in the United States, indicating a more buoyant market outlook and regulatory certainty. Analysis on the Viet Nam News platform wrote that unlocking the potential of spot cryptocurrency Exchange-Traded Funds (ETFs) in Hong Kong would require overcoming regulatory issues and promoting investor confidence.

It also added that as the market develops, more excellent stability and transparency will draw in more investors and strengthen the cryptocurrency trading and investment. The Bloomberg ETF analysts, James Seyffart, while explaining why the cryptocurrency ETF came out badly in Hong Kong, said that processes like this take time.

He also envisaged a 5-month timeline in most cases. But Eric Balchunas, believes that it ought to have accelerated, referencing the spot BTC ETF in the United States that took less than 90 days before keeping up. 

United States Bitcoin ETF Recorded Significant Inflow in 10 Days 

According to the data released by SoSo Value, the United States Bitcoin ETF recorded a total net inflow of $251.94 million in ten consecutive days. However, Fidelity Wise Origin Bitcoin Fund (FBTC) and BlackRock’s iShares Bitcoin Trust (IBIT) recorded a total inflow of $44 million and $182 million, respectively. Grayscale Bitcoin Trust ETF (GBTC) recorded no inflows on the same day.

This is termed strange when considering the negative trade flow for the United States spot Bitcoin ETFs as of April ending to early May.  Experts have remained optimistic amid the enveloping development. Eric Balchunas, in his last prediction, said that spot Ethereum ETFs may succeed in acquiring up to 10%- 15% spot Bitcoin ETF assets.

The latest report also states that Hong Kong’s regulatory authorities are working on introducing staking for spot Ethereum ETFs. This development is very important, considering the United States issuer’s idea to drop staking options from its filings. By returning the staking rewards, Hong Kong’s Ethereum ETFs will offer a competitive position by offering more profit to investors.

Maria Bartiromo

Maria Bartiromo

Maria Bartiromo is a renowned news writer and journalist, celebrated for her insightful reporting and authoritative voice. With a career spanning years, she has established herself as a trusted source of accurate and comprehensive news analysis, keeping readers informed on vital global developments.

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