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As China approves new cryptocurrency ETFs, expectations rise for a significant price surge in Bitcoin, Ethereum, and XRP. These developments amidst fierce competition between Hong Kong and U.S. markets for cryptocurrency inflows, signaling a potential boon for investors.
Hong Kong and U.S. Set to Battle for Crypto ETF Dominance Amid Surging Investor Interest
In a recent report, CoinGape, Bosera Capital, Harvest Global, and China Asset Management announced that they have been approved to sell spot Ethereum and Bitcoin ETFs in Hong Kong. According to Forbes, cryptocurrency investors expect Hong Kong and the United States to compete for cryptocurrency inflows into their respective funds due to the discoveries.
The demand for these ETFs could far outstrip supply, which could increase the prices of Bitcoin, Ethereum, and even XRP.
According to Forbes, more than $50 billion in assets under management have been pulled to the fleet of new spot Bitcoin ETFs approved by the US. Securities and Exchange Commission (SEC) in January. Since its adoption, investors have rushed to Bitcoin following ten years of application denials.
With assets under management of approximately $15 billion and $9 billion, respectively, Wall Street behemoths BlackRock and Fidelity have emerged as the two largest of the newly issued Bitcoin ETFs.
Given the success of ETFs in the United States, market players are pricing in the possibility of these ETFs performing very well in Hong Kong.
Currently, cryptocurrency is fully forbidden in Mainland China. Thus, mainland Chinese funds will unlikely have access to Hong Kong-listed Ethereum and Bitcoin ETFs. Hong Kong issuers have acknowledged that regulatory constraints hinder mainland Chinese funds from buying cryptocurrency-related exchange-traded funds (ETFs).
Recent feedback from Hong Kong-based ETF providers has dispelled misconceptions about the investment abilities of mainland Chinese investors participating in the Southbound Stock Connect scheme. Because of China's attitude toward cryptocurrency risk, the Southbound Stock Connect program excludes digital currency items, which aims to promote cross-border investment between mainland China and Hong Kong.
Bitcoin Struggles with High Resistance Levels Despite ETF Inflows and Market Optimism
Bitcoin (BTC) faces potential resistance as its price decline enters the third day despite initial recovery efforts. Bulls continue to protect market highs, relying on spot ETF inflows and the imminent halving. However, bearish traders believe the price will not rally as expected due to macroeconomic and industry variables.
New research from cryptocurrency business CryptoQuant explains why the market leader's price is still likely to fall despite good sparks. According to the analysis, the market's expected rapid recovery may be hampered by funding rates and correction levels.
Bitcoin funding rates are approaching 2021 bull numbers, which could lead to a reversal. Although positive financing rates indicate bullish momentum, overly high values might cause market price corrections. Similarly, after reaching a new all-time high last month, Bitcoin's price faces its highest-ever resistance level.
Bitcoin is trading around $63,300, following a weekend price slump exacerbated by massive liquidations. Before this moment, the asset price saw small dips below its peak of $70,000 and drifted sideways.
“The price is in a defined channel with around 20% expansion/retraction, an ideal scenario for large players to set up large positions. The Bitcoin price has risen by more than 300% since the last time the market was discounted, and in all the brief 20% corrections along the way, there hasn’t been a premium period like now," as per CryptoQuant.
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