Hong Kong Regulators Eye In-Kind Models for Bitcoin ETFs, as Bitcoin Surges Past $70,000
Summary:
Hong Kong's financial regulators are considering introducing in-kind creation models for Bitcoin exchange-traded funds (ETFs), potentially expanding the regional market. This is different from the U.S where only cash creation models are allowed. Bitcoin ETFs have gathered over $11 billion since their inception, despite a net outflow last week, before a resurgence on Monday. Bitcoin price surpassed $70,000 on March 25, stimulated by ETF inflows, coinciding with the lowest Bitcoin reserves on Coinbase for nearly nine years.
Financial regulatory bodies in Hong Kong are contemplating the introduction of in-kind creation models for Bitcoin spot exchange-traded funds (ETFs). As per a report penned by Bloomberg ETF analyst Rebecca Sin, this could potentially spur a surge in assets under management (AUM) and stimulate trading volume for Bitcoin ETF issuers within the territory, as mentioned in a post by Eric Balchunas on March 26. Sin penned, “Hong Kong aspires to inaugurate an in-kind creation of ETFs, as opposed to the U.S where cash-based transaction remains the only option — cash input translates to Bitcoin ETF output in the U.S, while Hong Kong is charting a route for Bitcoin input and ETF output, potentially creating a market opportunity.” This signifies a deviation from the blueprint laid out by the U.S. Securities and Exchange Commission (SEC), who only permit cash creation models for spot Bitcoin ETFs. According to reports, Bitcoin ETFs have accumulated a total of $11.28 billion worth of flows ever since their mainstream inception, notwithstanding a net deficit of 1.07 billion in net flows in the prior week, preceding a noticeable recovery on Monday. The U.S spot Bitcoin ETF market, after suffering five consecutive days of negative outflows, experienced an influx of over $15 million on March 25, coinciding with Bitcoin’s (BTC) highest daily closure above $69,000 in the last 10-day cycle. This monetary inflow into the ETF market saw the value of Bitcoin bolster past the $70,000 mark on March 25. With investors once again accruing BTC off exchanges, BTC reserves on Coinbase plummeted to a low of 344,856 BTC on March 18, unseen in almost nine years. Analysts at Bitfinex told Cointelegraph that the bearish movement in spot Bitcoin ETFs noticed last week is not something that should worry Bitcoin investors or affect the price trajectory in the long term. They stated, “Irrespective of the bearish outflows prominent last week, primarily stemming from the Grayscale Bitcoin Trust (GBTC), as investors swap out of GBTC owing to higher fees and seek to harvest profit, particularly long-term holders who entered the market in the bear phase, are not the only ones selling. We’ve noticed an uptick in whale wallet activities suggesting significant profit-taking as well.”
Published At
3/26/2024 4:46:43 PM
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