Bloomberg analysts have adjusted their previous forecasts for inflows into Hong Kong's newly approved Bitcoin and Ethereum exchange-traded funds (ETFs), now projecting $1 billion within the first two years.

Previously, Bloomberg's senior ETF analyst Eric Balchunas had estimated inflows of around $500 million over a similar period. This adjustment comes amid concerns over Chinese investor eligibility and the relative immaturity of the Hong Kong ETF market.

Addressing the challenge faced by Chinese investors, Balchunas highlighted the complexities arising from China's ban on the underlying assets related to these ETFs. He referenced a research note from colleague Rebecca Sin, emphasizing that this ban complicates accessibility for interested investors within China.

China has long maintained strict regulations on the cryptocurrency sector, initiating a ban on cryptocurrencies in 2013 and extending restrictions to mining in 2021. Sin's analysis suggested that retail Chinese investors might attempt to circumvent this ban by leveraging the $50,000 remittance quota to invest in these ETFs. However, the viability of this approach remains uncertain due to its limited functionality and potential regulatory hurdles.

Despite these challenges, analysts still anticipate substantial interest in the Hong Kong-listed crypto ETFs, predicting they will reach $1 billion in assets under management (AUM) within the initial two years. Balchunas noted that achieving this milestone hinges on significant enhancements in Hong Kong's financial infrastructure and ecosystem.

Currently, Bitcoin ETFs in the Asia-Pacific region hold $250 million in AUM, spread across five ETFs, three of which are based in Hong Kong and two in Australia. The largest fund, the CSOP Bitcoin Futures ETF listed in Hong Kong, boasts $121 million in AUM. Among the three firms set to introduce spot ETFs, Bosera and Harvest collectively manage $50 million across nine ETFs. ChinaAMC, with 15 ETFs and $3.6 billion AUM, is anticipated to have a substantial impact upon launching its spot crypto ETFs.