Analysts Predict Significant Growth in Bitcoin ETFs in Hong Kong
Experts anticipate that the launch of Bitcoin exchange-traded funds (ETFs) in Hong Kong will result in a notable increase in adoption, driven by the implementation of in-kind creation models.
Bloomberg’s senior ETF analyst, Eric Balchunas, highlighted the potential impact of Hong Kong’s adoption of an in-kind creation model for spot Bitcoin ETFs on assets under management (AUM) and trading volume in the region.
According to a research note by Bloomberg’s ETF analyst, Rebecca Sin, the in-kind model presents a significant opportunity for the market. Sin noted:
“Hong Kong is aiming for in-kind creation of the ETF, unlike the US, where the transaction is cash only. This could be an opportunity for the market.”
This approach stands in contrast to the cash-creation model favored by US regulators for spot Bitcoin ETFs, where transactions are cash only. Hong Kong authorities have signaled their readiness to accept applications for spot crypto ETFs, with plans to launch these products by mid-year.
Key Differences: In-kind vs. Cash Creations
Hong Kong’s potential adoption of the in-kind model allows ETF issuers to exchange underlying assets like Bitcoin with market makers, while the US SEC’s cash creation approach requires fund managers to sell Bitcoin to provide cash for shareholder redemptions.
BlackRock, a major Bitcoin ETF issuer, expressed concerns about the challenges of maintaining share prices aligned with Bitcoin’s actual value using the cash redemption method.
Bitcoin ETFs could see significant growth in Hong Kong due to in-kind creation model – analysts
