Markets

Backdoor to China? Hong Kong Crypto ETFs Look to Mainland Investors via Stock Connect

Published

9 months ago

10 May, 2024

Backdoor to China? Hong Kong Crypto ETFs Look to Mainland Investors via Stock Connect

(Kitco News) – Even before the launch of multiple spot Bitcoin (Bitcoin) and Ethereum (ETH) exchange-traded funds (ETFs) in Hong Kong, many analysts speculated that the move would be used as a backdoor to allow Chinese investors to re-engage with crypto markets despite a ban on all things crypto in China.

This speculation was confirmed by the CEO and chief investment officer of Harvest Global Investments, Han Tongli, who counted told the South China Morning Post that the company “will not rule out” requesting that its ETFs that invest directly in crypto tokens be included in the connection program linking exchanges in mainland China and Hong Kong, as long as “everything goes smoothly and smoothly” in the next two years.

Harvest is a Chinese fund institution and one of three issuers of Bitcoin and Ether ETFs in Hong Kong, and according to Tongli, the company is already looking to offer Chinese citizens access to products through Hong Kong’s ETF Connect framework.

“We have some plans for Bitcoin and Ethereum ETFs to reach investors in China,” said Tongli. “If we, as Harvest Global, are able to include spot BTC-ETH ETFs in the Stock Connect program, a new investment path will be opened for investors in mainland China.”

“As the regulatory environment on the continent is quite uncertain, the Stock Connect program can be a pioneer in regulating investments in cryptocurrencies, especially Bitcoin and Ethereum,” he added.

ETF Connect launched in May 2022 and offers mainland investors access to a selected range of ETFs listed on the Hong Kong market. The program is part of the larger Stock Connect scheme launched in 2014 that connected the Hong Kong and Shanghai stock exchanges.

Data provided by Farside shows that the six newly launched ETFs in Hong Kong started with US$292.7 million in seed funding at their launch on May 2 and have since generated additional inflows worth US$24.7 million.

The inclusion of these ETFs in the Connect program could provide a confidence boost to the market, providing access to a large new group of investors eager to invest in assets that can maintain their value amid China’s economic difficulties, including a declining property market. .

However, it is not yet known whether the assets will be permitted or not, as the Bitcoin and Ether futures ETFs launched in Hong Kong in 2022 have not yet been included in the Stock Connect program.

“People are still skeptical about Hong Kong’s status as a special country [administrative] region,” Tongli said during a Bitcoin Asia panel discussion. “It’s located in China… and a lot of people don’t want to see Hong Kong become more successful for whatever reason.”

That said, Tongli is still optimistic about the long-term potential for the Hong Kong market, which he said is a “more neutral” region that has broad appeal in Asia. Once adoption increases, he suggested that local crypto ETFs could grow to double the size of US products, but did not offer a timeline for this to occur.

He said it largely depends on when Hong Kong is able to establish a full virtual asset ecosystem, but the city has “sown a seed” by launching ETFs. Eventually, Tongli said he sees other products, such as stablecoins, receiving regulatory approval and being released to the market.

For now, Harvest is focused on making its spot crypto ETFs the top products in Hong Kong in terms of trading volume by the end of the year, ahead of the launch of ETF-based collateralized financial products, Tongli said.

So far, the Bosera HashKey Bitcoin and Ether spot ETFs have been the best performers, recording net inflows of $15.2 million and $8.1 million, respectively, since launch, in addition to initial funding of $61 .1 million and US$12.3 million, respectively, according to data provided by Farside.

ETFs offered by China Asset Management Company (ChinaAMC) had the highest initial funding, with the ChinaAMC Bitcoin ETF starting with $123.6 million in assets under management (AUM), while the ChinaAMC Ether ETF started with $20.2 in AUM.

Speculation about Chinese investors’ access to Hong Kong ETFs had already been circulating before Tongli’s Thursday comments with SYZ Capital managing director Richard Byworth counting his X followers on May 1 that he “just got back from Hong Kong” where “there is [was] say that the ETF could be added to stock connect.”

“The implications for this are absolutely huge (it basically means mainland money can buy it),” Byworth added.

Brian HoonJong Paik, co-founder and chief operating officer of SmashFi, he responded “It’s just a matter of time. 70% of Chinese wealth is in real estate and there are now 100 million empty homes. The CCP needs an alternative resource to mitigate social unrest.”

On April 15, Paik willing the reasons he thinks Chinese investors will inevitably have access to ETFs.

Citing the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect programs, he noted that they “enable investors in mainland China and Hong Kong to trade stocks in each other’s markets through their securities firms or local brokers ,” adding that “The Stock Connect Connect program covers a wide range of stocks but is subject to a daily quota.”

Another factor is the “Qualified Domestic Institutional Investor (QDII) Scheme”, which “allows qualified Chinese institutional investors (such as banks, funds and insurance companies) to invest in overseas markets, including Hong Kong. This scheme also helps you diversify your investment strategies,” he said.

“Chinese residents can also invest in Hong Kong stocks through brokers that have the right to operate in both markets,” Paik noted. “These companies often offer services to help individuals navigate regulatory requirements for foreign investments.”

There is also a “Mutual Recognition of Funds (MRF)” program between Hong Kong and mainland China that “allows eligible funds from the Mainland and Hong Kong to be distributed in each other’s markets through a streamlined process,” he said.

“These mechanisms make the Hong Kong stock market one of the most accessible foreign markets for Chinese investors, promoting financial integration between the Mainland and Hong Kong”, concluded Paik. “Delisting just the Bitcoin ETF would likely cause significant repercussions among institutional and retail investors in China and Hong Kong.”

Disclaimer: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes. This is not a request to carry out any exchange of goods, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no liability for loss and/or damage arising from the use of this publication.

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Markets

Crypto Markets Rebound as Spot Bitcoin ETFs Attract Massive Inflows

Published

6 months ago

17 July, 2024

FinCrypt Staff

Crypto Markets Rebound Ahead of Early Ethereum ETF Approval

This week saw $722 million worth of Bitcoin spot ETF inflows, including the largest daily inflow in a month.

Cryptocurrency markets rallied on Wednesday, driven by inflows into spot Bitcoin exchange-traded funds (ETFs).

The price of Bitcoin (BTC) is up 3% over the past 24 hours to last change hands at $65,200, according to CoinGecko. Ethereum (ETH) is up 2% and is trading at $3,471. Solana (SUN) and Polkadot (POINT) increased by 4%.

Bitcoin spot ETFs saw $422 million in daily inflows on Tuesday, the highest in the past 30 days, according to Far side data, . The all-time record for a single day was $1.05 billion on March 12.

Among Tuesday’s top contributors, BlackRock’s IBIT led with $260 million in inflows, followed by Fidelity’s FBTC with $61 million. This week has already seen more than $722 million in inflows.

Among the top 100 cryptocurrencies by market cap, Worldcoin (WLD) led with a 28% increase, followed by Helium (HNT) with 20% and Lido DAO (LDO) with 15%.

Worldcoin, a decentralized identity project led by OpenAI CEO Sam Altman, announced is extending the lockups for early investors and team members. This means that tokens will be gradually released through 2029, instead of the original 2027 plan. Token unlocks are generally seen as a negative because they increase supply and early investors can sell their tokens for profit.

Meanwhile, XRP, the token of the XRP Ledger network, jumped 8% after the CME and CF benchmarks introduced new indices and reference rates for XRP.

U.S. stocks faced a downturn on Wednesday. The S&P 500 fell 1%, while the Nasdaq Composite and Dow Jones Industrial Average both fell 2%.

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Markets

Altcoins on the cusp of a major breakout – WLD, AR, and INJ prices could surge by 20% in the coming days

Published

6 months ago

17 July, 2024

FinCrypt Staff

Altcoins on the cusp of a major breakout – WLD, AR, and INJ prices could surge by 20% in the coming days

Crypto markets appear to have been taken over by the bulls as major tokens have surged above their crucial resistance zone. Bitcoin surged above $65,000 while Ethereum was above $3,500, and XRP, which had remained passive for quite some time, surged over 40% in the past few days to hit $0.6. The uptrend has been captured in most altcoins, with Worldcoin (WLD), Arweave (AR), and Injective (INJ) leading the rally. Here’s what to expect for these tokens in the coming days.

Worldcoin (WLD) Price Analysis

O Worldcoin Price has been trading inside a descending wedge since it marked a new ATH near $12 in the final days of Q1 2024. The recent price action helped the price break out of the upper resistance of the wedge, breaking above the crucial resistance zone between $2.21 and $2.39. Market sentiments have changed, but technicals suggest that the bulls may remain passive for a while, which could offer some room for a bearish pullback.

The price broke out of the wedge with a significant increase in volume, but the current volume suggests that the bulls have taken a step back. Meanwhile, the RSI is about to reach the upper boundary, which could attract bearish forces. Additionally, the DMI has undergone a bullish crossover, but the decline in the ADX suggests that the rally may remain consolidated above the gains. Therefore, the WLD price is expected to maintain a horizontal consolidation between $3 and $3.3 and trigger a fresh rally to $4.4 during the next bullish rally.

Arweave (AR) Price Analysis

Arweave formed a strong base around $25, which helped the rally trigger a recovery during the bearish attack. Mt. Gox and German terror forced the price to fall below $20. However, the recent price action has brought the altcoin within the bullish range and raised expectations of maintaining a decent uptrend for a few more days.

AR price has hit one of the major resistances around $30 to $31.5, which could act as a strong base once overcome. The buying volume is slowly increasing, which could keep the bullish hopes for the rally high. Moreover, the supertrend has just flashed a buy signal, indicating a clean reversal of the trend. Therefore, AR price seems primed to maintain a healthy uptrend and rally above $40. However, if the bulls maintain a similar trend, making new highs above $50 may not be a tedious task for the bulls.

Price Analysis of Injective (INJ)

Injective price has been showing sharp strength since the beginning of the year and hence, the recent turnaround is expected to revive a good uptrend going forward. The bears engulfed the rally to a large extent, but the recent price action suggests that the bulls have regained their dominance. Therefore, INJ price is expected to maintain a strong uptrend with a bearish interference on the way down.

INJ price has surged above the lower support zone and has registered consecutive bullish candles. Although the volume is below the required levels, the OBV is maintaining a sharp uptrend. Furthermore, the Ichimoku cloud lead span B is heading towards the lead span A and a healthy crossover indicates the start of a new uptrend. However, INJ price may be out of the bears’ reach once it secures the resistance zone between $30.77 and $32.12, which seems to be on the horizon.

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Markets

Ethereum at $3.5K, Exchange Supply Hits 34-Month High

Published

6 months ago

17 July, 2024

FinCrypt Staff

Ethereum at $3.5K, Exchange Supply Hits 34-Month High

Ethereum (ETH) supply on exchanges has hit a 34-month high as the asset’s price surpassed the $3,500 mark.

ETH has risen 2.3% over the past 24 hours and is trading at $3,490 at the time of writing. The second-largest cryptocurrency — with a market cap of $419 billion — briefly touched an intraday high of $3,517 earlier today.

ETH Price, Whale Activity, RSI, and Exchange Supply – July 17 | Source: Santiment

Ethereum’s daily trading volume also increased by 7.6% to reach $19.8 billion.

According to data provided by Santiment, the supply of Ethereum on exchanges has reached $19.52 million ETH. This level was last seen in September 2021, when the asset was trading around the same price.

On the other hand, data from the market intelligence platform shows that the number of whale transactions has fallen by 12% in the last day — falling from 8,730 to 7,629 unique transactions per day.

The move shows that the supply of Ethereum on exchanges has been increasing with small deposits rather than large transactions from whales.

Additionally, the ETH Relative Strength Index (RSI) is currently hovering at the 60-mark, per Santiment. The indicator shows that Ethereum is slightly overbought at this price point, but it may not be in a critical position due to its large market cap.

One of the main drivers of Ethereum price increase is ETH spot expectations ETFs in the US Investment products are scheduled to start trading on July 23rd.

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Markets

Bits + Beeps: How to Play the ‘Trump Trade’ in Cryptocurrencies After the Assassination Attempt

Published

6 months ago

17 July, 2024

FinCrypt Staff

Bits + Bips: How to Play the ‘Trump Trade’ in Crypto After the Assassination Attempt

Also, how much will the Fed cut rates (and when)? What will be the inflows into ETH ETFs? And what is the near future for Bitcoin?

Posted on July 17, 2024 at 12:00 PM EST.

Listen to the episode at Apple Podcasts, Spotify, Capsules, Source, Podcast Addict, Pocket molds, Amazon Musicor on your favorite podcast platform.

In this episode of Bits + Bips, hosts James Seyffart, Alex Kruger and Joe McCann, joined by guest Jack Platts, dive into the market reaction to the recent assassination attempt on former President Donald Trump, analyzing how this event will influence the 2024 US presidential election and the cryptocurrency markets.

They also cover potential rate cuts: Could there be a cut in July? How big could the September rate cut be? Could the decision be influenced by the upcoming election?

They also give their predictions on what percentage of BTC ETF inflows the ETH ETFs will reach, and James talks about what he expects for Grayscale’s ETHE (hint: his outlook would be positive for ETH).

Finally, they delve into what’s next for Bitcoin as the German government runs out of BTC and Mt. Gox distributions begin. Just now?

Program Highlights:

Whether Trump’s shooting decided the election and whether the event caused a “flight to safety”
How election markets are becoming a place to watch election probabilities and whether cryptocurrencies “lean right”
Whether rate cuts will occur in July or September and by how much they will cut: 25 bps or 50 bps
How Joe sees the relationship between global liquidity cycles, rate cuts, and the potential rise of Bitcoin
What are the new updates about Ethereum ETFs and their expected launch?
Why Solana Hasn’t Performed Significantly Better Since Trump News
What Market Breadth Indicates About the Current Market Rally and the Impact of Rates on Small Caps
Everyone’s predictions on ETH ETF inflows and how much outflow we’ll see on Grayscale’s ETHE
What’s Next for BTC After German Government Exits Bitcoin and Mt. Gox Giveaways Starting This Week