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Hong Kong GREENLIGHTS Bitcoin
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Hong Kong watchdog greenlights launch of spot bitcoin and ether ETFs
The Hong Kong Securities and Futures Commission (SFC) has granted approval for the launch of the first spot bitcoin and ethereum exchange-traded funds (ETFs) by China Asset Management and Bosera Asset Management. This significant regulatory milestone positions Hong Kong as a potential trailblazer in Asia, embracing cryptocurrency as a mainstream investment avenue.
Following the footsteps of the United States, where similar ETFs were introduced earlier this year, Hong Kong's decision has further propelled the price of bitcoin in recent months. A spot bitcoin ETF mirrors the price movement of bitcoin and is accessible through brokers, allowing investors to gain exposure to cryptocurrencies without directly purchasing them.
Unlike futures-based ETFs that follow futures contracts, spot bitcoin ETFs are investment instruments that hold actual bitcoins. This structure enables investors to access cryptocurrency markets without the complexities of holding digital assets themselves.
The approval in Hong Kong has garnered optimism among bitcoin enthusiasts, anticipating an influx of millions of new investors and potentially billions of dollars in fresh investments into the market. However, in contrast, the US Securities and Exchange Commission (SEC) has shown reluctance towards approving such funds. Under the chairmanship of Gary Gensler, the SEC has expressed concerns about bitcoin's volatility and its misuse by fraudulent entities, making them cautious about endorsing these financial products.
As Hong Kong paves the way for cryptocurrency adoption, the global financial landscape continues to evolve, with regulators navigating the challenges and opportunities presented by the digital asset market.
Bitcoin Could Surge to $120K on 'Doomsday Rally,' Trader Says
Despite a recent 10% weekly decline in bitcoin's value, geopolitical tensions and the quest for investment hedges have traders optimistic about its potential surge in the upcoming months. Bitcoin, originally conceived as a hedge against geopolitical events post the 2008 financial crisis, continues to be perceived as a viable alternative investment, with some predicting its price could soar to $120,000 soon.
Edouard Hindi, Chief Investment Officer at Tyr Capital, emphasized bitcoin's role as a 'doomsday asset' in 2024, noting its increased correlation with gold and the ongoing diversification of investments away from traditional financial assets. Hindi believes that the current Doomsday rally, led by ETFs, could drive bitcoin's price to the projected $120,000 mark as global geopolitical tensions intensify, prompting the middle class to safeguard their wealth.
Over the weekend, crypto markets experienced significant volatility due to escalating tensions between Iran and Israel and profit-taking ahead of the anticipated bitcoin reward halving on April 20. Major tokens saw declines of up to 18% compared to the previous week's peak before partially recovering on Monday. However, the downturn resumed as Israel deliberated its response to Iran's drone and missile attacks.
Furthermore, there has been a noticeable slowdown in inflows to bitcoin exchange-traded funds (ETFs) in the past week. Among the various ETFs, only BlackRock’s IBIT recorded inflows on Monday, while the remaining 10 witnessed outflows.
Market analysts like Alex Kuptsikevich, a senior market analyst at FxPro, believe that bitcoin's short-term price movements will determine the trajectory of the broader crypto market in the coming weeks. The recent sell-off in US stock markets has impacted global risk appetite, leading to uncertainty in the market. Kuptsikevich highlights the significance of this moment in determining the market's direction, suggesting that a rebound could signal an early recovery, while a further decline may trigger broader position liquidations.
Ethereum price data casts doubt on the strength of ETH’s support at $3K
Ether's price has experienced a significant decline, plunging 21% from April 9 to April 14, hitting a 50-day low of $3,081. Despite some recovery, Ether's failure to breach the $3,200 resistance level on April 14 raises concerns about its ability to maintain support at $3,000. This decline coincides with diminishing risk appetite among professional traders, as reflected in ETH derivatives data.
Investors are cautiously optimistic about the potential approval of a spot Ether exchange-traded fund (ETF) by the U.S. Securities and Exchange Commission (SEC) in May. However, the SEC's prolonged inactivity on several pending ETF applications, including those from major firms like BlackRock and Fidelity, casts doubt on the likelihood of approval. Eric Balchunas, a Senior Bloomberg ETF analyst, suggests a low approval probability of around 35%, emphasizing the absence of constructive feedback from the regulator.
Despite the speculation surrounding the Ether ETF approval's impact on its price, Bitcoin, the leading cryptocurrency, also experienced a 14% decline in the five days leading up to April 13. A comparative analysis of Ether's performance against its competitors, particularly those involved with decentralized applications (DApps), reveals a more nuanced picture.
Since April 9, Ether's 15% decline has been more pronounced compared to BNB's 8% drop and Tron's 10% decrease, while Solana experienced a steeper fall. However, Ethereum's network total value locked (TVL) surged to its highest level in over 13 months on April 15, indicating strong on-chain activity.
DApp transaction volumes and active user counts further emphasize Ethereum's network superiority. Despite a modest 3% drop in active addresses since April 9, Ethereum outperformed the BNB Chain, which saw a 7% decline.
Analyzing Ether's options is crucial to understanding professional traders' sentiment. On April 16, Ether's options skew metric entered bearish territory, indicating growing risk aversion among whales and market makers.
In conclusion, while the anticipation of the spot Ether ETF decision and Ethereum's on-chain activity offer some support to its price, increasing risk aversion among professional traders advises caution. Further price corrections below $2,900 cannot be ruled out, warranting careful monitoring of market developments.
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