Bloomberg Explains Effect of Bitcoin ETF FOMO on Gold Funds in China
In a recent post on X, Balchunas highlighted the desperation among Chinese investors to drift away from their struggling domestic economy and stock market. Balchunas wrote, “Investors there are so desperate to buy things that are not linked to their own economy/stock [market], which has been in the gutter.”
This sentiment reflects a growing appetite among Chinese investors for assets perceived as safer or less correlated with their local economic conditions. The effects of the absence of Bitcoin ETFs in China are notable, as Balchunas points out, “For those wondering, buying Bitcoin ETFs is not allowed there.”
FOMO among Chinese investors for Bitcoin ETFs is evident, given their interest in gold and US stocks, with Bitcoin easily outperforming both. This influx of interest pushed the gold ETF premium to 30.49%.
Hong Kong to Allow Bitcoin Exchange-Traded Funds?
An increasing number of hedge fund firms are strategically using their subsidiaries in Hong Kong to explore the Spot Bitcoin ETFs, according to reports from the Securities Times. Institutions like Harvest Fund and Southern Fund’s Hong Kong subsidiaries are actively engaged in this exploration.
Harvest Fund has already filed an application for a Bitcoin spot ETF with the Hong Kong Securities Regulatory Commission, and experts in the industry speculate that we may see the introduction of Bitcoin ETF applications as early as the second quarter of this year.
This forecast indicates significant momentum within the industry, positioning Hong Kong as a crypto hub. Southern Dongying, a subsidiary of Southern Fund, is set to emerge as a leader in the Bitcoin ETF market by launching the first crypto ETF in Asia, paving the way for further Bitcoin adoption and potentially impacting the BTC price trajectory positively.
Insight:
Chinese investors’ enthusiasm for assets diversifying from their domestic market showcases a need for alternative investment avenues. The unavailability of Bitcoin ETFs in China creates a vacuum that investors are filling with gold and US stocks, indicating a strong desire for exposure to global markets. As traditional economic uncertainties persist, the potential approval and introduction of Bitcoin ETFs in Hong Kong could provide Chinese investors with a new investment opportunity and potentially bridge the gap between their local market limitations and global investment prospects.
