Hong Kong is an economic powerhouse and the gateway for China’s overseas investment. Ready If a spot Bitcoin exchange-traded fund (ETF) is approved, demand for Bitcoin (BTC) will surge. This development, facilitated by the Southward Stock Connect program, could trigger a huge inflow of $25 billion from mainland China.
The Southbound Stock Connect program bridges the gap for eligible Mainland investors and provides them with access to eligible stocks listed on the Hong Kong Stock Exchange. Matrixport, a Singapore-based cryptocurrency service provider, highlights the program’s ability to facilitate “up to RMB 500 billion (HKD 540 billion and USD 70 billion) in transactions annually.”
Although the exact numbers remain estimates, Matrixport presents a “blue sky” scenario. This scenario assumes that the average unused allocation from the Southbound Stock Connect program over the past three years is directed to spot ETFs. This optimistic outlook means that the Hong Kong Bitcoin ETF could have a potential profit of $25 billion, or HK$200 billion when expressed in Hong Kong dollars.
Bitcoin ETF investment of $15 billion to $25 billion is awaited in Hong Kong
The Southbound Stock Connect program has an annual quota for mainland Chinese investors to buy HK$540 billion worth of Hong Kong stocks, 360MarketIQ reported. However, the actual usage amount in the past three years was only HK$450 billion, HK$400 billion, and HK$320 billion, respectively. This will leave an undrawn quota in the range of HK$100 billion to HK$200 billion ($15 billion to $25 billion) annually.
Matrixport revealed that potentially HK$100 billion to HK$200 billion would be available for Bitcoin ETF investment if approved without restrictions. This untapped capacity presents an excellent opportunity for Bitcoin investment through the proposed Hong Kong ETF.
The potential approval of a Bitcoin ETF coincides with China’s growing interest in diversifying its financial landscape, especially after the tightly controlled renminbi has depreciated by nearly 2% against the US dollar over the past two years. We are doing so. This worrying trend is driven by a slowing economy and a narrowing trade surplus.
The Chinese yuan is at a 17-year low against the US dollar. Matrixport highlights the recent surge in gold purchases by China’s central bank, pointing to the demand for diversification. This highlights China’s strategic shift towards alternative assets, and Bitcoin appears poised to benefit greatly.
Mainland funds also eager to participatee
The possibility of a Bitcoin exchange-traded fund (ETF) being listed in Hong Kong has attracted significant interest from mainland China. Nick Ruck, chief operating officer of Hong Kong-based ContentFi Labs, said:
“The Mainland-based fund has applied to issue a Spot Bitcoin ETF through its Hong Kong subsidiary. If approved, Bitcoin could become more accessible to eligible Mainland investors. .”
A report from Nikkei Asia confirms this trend, with applications from prominent companies such as Harvest Global Investments (the Hong Kong arm of Vocera Asset Management) and Value Partners (owned by Chinese brokerage GF Holdings). This highlights the enthusiasm of mainland Chinese financial institutions for participation. Potential Bitcoin investment opportunity.
The United States granted approval to about a dozen spot Bitcoin ETFs four months ago, and the path to similar approval in Hong Kong is looking increasingly clear. The impressive performance of US ETFs, which attracted a staggering $12 billion in investor capital and propelled Bitcoin to unprecedented heights above $73,000, established a compelling precedent for this effort.
The Hong Kong ETF, coupled with the Stock Connect program’s expansion into mainland China, could spark a new era for Bitcoin in Asia. An influx of $25 billion from mainland investors would undoubtedly create significant momentum, further pushing Bitcoin into the mainstream and solidifying its status as a global asset class.
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