The potential opening of Hong Kong’s Bitcoin exchange-traded funds (ETFs) to investors from mainland China has sparked a flurry of excitement and speculation within the cryptocurrency market.
On April 30, Hong Kong launched spot Bitcoin and Ethereum ETFs, marking a significant development for crypto trading in Asia. Although the initial trading volume was modest, the geographical and economic proximity of Hong Kong to China has raised prospects of cross-border crypto investments.
Will China Enable Access to Bitcoin ETFs?
Richard Byworth, managing partner at SyzCapital and a noted Bitcoin investor, recently hinted at a pivotal development. In a conversation with Samson Mow on social media platform X (formerly Twitter), Byworth mentioned ongoing discussions about including the spot Bitcoin ETF in the Stock Connect program.
This program, encompassing the Shenzhen-Hong Kong and Shanghai-Hong Kong Stock Connects, facilitates cross-border trading. It allows investors to use local brokers and clearing houses to access shares in each other’s markets.
“I just got back from Hong Kong. There is talk that the ETF could be added to stock connect. The implications for this are absolutely enormous. [It] basically means mainland money can buy it,” Byworth said.
Despite China’s stringent anti-crypto policies, Byworth’s comments have rekindled hopes. Brian HoonJong Paik, co-founder and COO of SmashFi, echoed this sentiment. He highlighted the need for alternative assets in China against a backdrop of real estate challenges.
Paik pointed out that with significant capital locked in underutilized real estate, the Chinese Communist Party might look favorably on accessible investment diversifications like Bitcoin ETFs.
“[The] Hong Kong stock market [is] one of the most accessible foreign markets for Chinese investors, promoting financial integration between the Mainland and Hong Kong. Excluding only the Bitcoin ETF would likely cause significant repercussions among both institutional and retail investors in both China and Hong Kong,” Paik said.
Adding to the optimistic outlook, analysts from Bernstein have reinforced a bullish stance on their Bitcoin price prediction. Despite a recent dip to about $57,000, Bernstein’s analysts, Gautam Chhugani and Mahika Sapra, predict that Bitcoin could reach $150,000 by the end of 2025.
The analysts cite robust inflows into US Bitcoin ETFs and favorable market conditions post-halving.
“We feel even better about that call and BTC metrics indicate a healthy cycle, still in its early stages. Risk-reward here remains attractive,” the analysts wrote.
Read more: Bitcoin Price Prediction 2024 / 2025 / 2030
The confluence of potential regulatory easing in China, strategic financial moves in Hong Kong, and positive market analytics from experts suggest a bullish phase for Bitcoin. As mainland investors eye the ETF market in Hong Kong, the crypto market might be about to witness significant shifts.
Nonetheless, Kevin Lee, Chief Executive Officer at Gate.HK, told BeInCrypto that the inclusion of ETFs in the Stock Connect program is a relatively recent development. Despite the excitement around the opportunities for Chinese investors to access Hong Kong’s spot Bitcoin ETFs, it is not guaranteed.
“It’s worth noting that out of more than a hundred ETFs listed in Hong Kong, only 10 have made it into Stock Connect so far. While we see regulators actively working to relax the criteria for ETF inclusion, potentially adding more than 60 new ETFs to the list, including crypto ETFs, remains a distant consideration. For instance, even as spot crypto ETFs grow toward the current inclusion criteria for assets under management (approximately $1.7 billion), meeting other inclusion standards will still take at least six months,” Lee concluded.
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