Hong Kong’s financial regulators are planning to introduce in-kind creation models for spot Bitcoin exchange-traded funds (ETFs), creating a potentially lucrative market opportunity. This move could significantly boost the assets under management (AUM) and trading volume for Bitcoin ETF issuers in the region. Bloomberg ETF analyst Rebecca Sin highlighted this development in a research note, which was shared by Eric Balchunas on March 26.
Unlike the US Securities and Exchange Commission (SEC), which only allows for cash creation models for spot Bitcoin ETFs, Hong Kong is adopting a different approach. This divergence in regulatory frameworks presents an interesting contrast.
Bitcoin ETFs have gained considerable traction, accumulating a total of $11.28 billion in flows since their launch. However, last week saw a net negative flow of $1.07 billion, before experiencing a rebound on Monday. On March 25, the US spot Bitcoin ETFs witnessed over $15 million in flows, coinciding with Bitcoin’s highest daily closing price of over $69,000 in the last 10 days.
These ETF inflows had a positive impact on Bitcoin’s price, propelling it to reclaim the $70,000 mark on March 25. As investors resumed accumulating BTC off exchanges, the supply of BTC on Coinbase plummeted to a nine-year low of 344,856 BTC on March 18.
Despite the negative outflows seen last week, Bitfinex analysts reassured Bitcoin holders and price action participants that this should not be a long-term concern. They believe that the market will continue to exhibit resilience and upward momentum.
In a related development, a Bitcoin whale recently moved over $6 billion worth of BTC, further highlighting the significant activity within the cryptocurrency space.