Hong Kong's ETF market is much smaller compared to the US market, and as a result, Bitcoin ETFs may experience less liquidity, wider spreads, and premium discounts, according to Bloomberg's ETF strategist, Eric Balchunas.

The Securities and Futures Commission (SFC) recently approved spot Bitcoin and Ethereum ETFs, which will be available for trading in two weeks, causing excitement in the crypto community. However, the question remains whether these Hong Kong spot Bitcoin ETFs will generate the same level of inflows as their US counterparts.

Balchunas has a conservative outlook for the inflows of Bitcoin ETFs in Hong Kong, predicting a more modest figure of around $500 million, rather than the speculated $25 billion. He cited several reasons for this cautious projection, including the relatively small size of the Hong Kong ETF market, which has only about $50 billion in total assets, and restrictions for local Chinese investors to access these ETFs.

Additionally, the approved issuers, such as Bosera, China AMC, and Harvest, are smaller players compared to industry giants like BlackRock. The ecosystem supporting these ETFs may also lack liquidity and efficiency, potentially leading to wider spreads and premium discounts. Furthermore, the fees associated with these ETFs are expected to be between 1-2%, which is significantly higher than the low-cost fees typically found in the US market.

Balchunas highlighted the positive implications of Bitcoin ETFs, noting that they provide additional investment avenues for Bitcoin. However, he emphasized that compared to the US market, the impact may be relatively small. Over the long term, improvements such as increased liquidity, tighter spreads, lower fees, and involvement of larger issuers could mitigate these limitations.

In other news, Bitcoin analyst Willy Woo predicts that with the introduction of new Bitcoin ETFs, price targets could reach $91k at the bear market bottom and $650k at the bull market top, once ETF investors have fully deployed their assets according to asset manager recommendations. Despite these projections, Woo considers these figures to be conservative, suggesting that Bitcoin could surpass the market capitalization of gold once ETFs have fulfilled their role.