Key Points
- Hong Kong's financial regulators are planning to introduce in-kind creation models for Bitcoin ETFs.
- This approach could significantly boost assets under management and trading volume for Bitcoin ETF issuers in the region.
Hong Kong's financial regulators are looking to establish in-kind creation models for spot Bitcoin ETFs. This could provide a substantial market opportunity, potentially leading to a significant increase in assets under management and trading volume for Bitcoin ETF issuers in the area.
Hong Kong vs US Approach
This approach by Hong Kong differs from the model employed by the U.S. Securities and Exchange Commission, which only permits cash creation models for spot Bitcoin ETFs. The Hong Kong model aims for Bitcoin in and ETF out, contrasting the US model of cash in, Bitcoin ETF out.
Bitcoin ETFs have seen a total of $11.28 billion worth of flows since their launch, with a net negative of 1.07 billion in net flows last week, before starting to recover on Monday. After five consecutive days of negative outflows last week, the United States spot Bitcoin ETFs saw over $15 million worth of flows on March 25.
Bitcoin Price and ETF Inflows
On the same day, the price of Bitcoin (BTC) recorded its highest daily close of above $69,000 in the past 10 days. Boosted by the ETF inflows, Bitcoin's price surpassed $70,000 on March 25. As investors have resumed accumulating BTC off exchanges, BTC supply on Coinbase reached a nine-year low of 344,856 BTC on March 18.
Last week's negative spot Bitcoin ETF inflows are not a long-term concern for Bitcoin holders and price action, according to analysts at Bitfinex. They explained that the negative outflows are primarily from the Grayscale Bitcoin Trust (GBTC), as investors switch out of the higher fees charged by GBTC and also take profit. They further noted that GBTC investors are not the only sellers in the market, with whale wallet activities indicating significant profit-taking.
