Last Monday, local authorities in Hong Kong approved the first Bitcoin (BTC) Spot Exchange Traded Fund (ETF). At the same time, the country also launched an Ethereum (ETH) Spot ETF on the exchange. With these steps, Hong Kong is trying to position itself as a leader within the Asian crypto market.

According to Eric Balchunas, an ETF expert at Bloomberg, the new BTC ETF could attract $1 billion in capital within the first two years.

Balchunas previously estimated the funds could raise about $500 million in two years. However, he recently revised his prediction upwards. On the social media platform X shared the Bloomberg analyst that the fund can now expect inflows of $1 billion.

Regulations hinder Bitcoin ETF success

The $1 billion expected inflow for Hong Kong’s new Bitcoin ETF over two years is relatively modest compared to the performance of similar funds in the United States, where some ETFs have already attracted nearly $30 billion in capital in just three and a half months. This is in stark contrast to the $25 billion that some analysts had predicted.

A major reason for the lower inflow into Hong Kong is legal and regulatory complications. According to Bloomberg’s Eric Balchunas, investors from China may not be able to invest in these funds, which rules out a significant source of capital. Balchunas explains:

“Investors in mainland China are unlikely to be eligible to invest in the Hong Kong-listed spot Bitcoin and Ethereum ETFs as they are banned from purchasing virtual assets.”

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