Recently, under the continuous disturbance of geopolitical conflicts, the U.S. stock market and the virtual currency market have suffered heavy losses. On April 16th, the price of Bitcoin broke through the $63,000 mark, falling nearly 7% during the trading day.

There has been new progress in domestic virtual asset spot ETFs. On April 15th, three public fund Hong Kong subsidiaries, Bosera International, Huaxia Fund (Hong Kong), and Harvest International, all issued announcements stating that their virtual asset spot ETF products have received in-principle approval from the Hong Kong Securities and Futures Commission (SFC).

Industry insiders analyzed to First Financial Daily reporters that currently, the SFC has only given in-principle approval, and there is still a series of processes such as document review and public announcement that need to be completed before the virtual asset spot ETFs can be listed.

Regarding the risks involved in investment, traders analyzed to reporters that spot Bitcoin ETFs and spot Ethereum ETFs are managed passively. A decline in the index may lead to a corresponding decline in the value of the funds.

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Expansion of virtual asset investment channels

Specifically, both Harvest International and Huaxia Fund (Hong Kong) mentioned that they have received approval from the SFC to provide virtual asset management services to investors and plan to issue ETF products that can invest in spot Bitcoin and spot Ethereum.

Previously, on October 31, 2022, the SFC allowed the market to launch ETFs tracking virtual asset futures. The Southern Fund Hong Kong subsidiary, Southern Eastern, launched its Southern Eastern Bitcoin Futures ETF and Southern Eastern Ethereum Futures ETF on the Hong Kong Stock Exchange on December 16, 2022.

It cannot be ignored that spot Bitcoin ETFs and spot Ethereum ETFs, as financial products that directly invest in virtual currencies, carry various risks.

The aforementioned traders analyzed that risks related to the Bitcoin and Ethereum industry, speculative risks, price volatility risks, ownership concentration risks, regulatory risks, cybersecurity risks, and risks associated with illegal use and trading time differences all need attention. In addition, these ETFs also involve risks related to the stability, security, and custody issues of virtual asset trading platforms (VAPTs). Investors should fully consider these risks when making decisions.

According to industry insiders, the Bitcoin ETFs currently on the global market are mainly divided into two categories: one is based on Bitcoin futures contracts, and the other is based on Bitcoin physical assets.The latest disclosure from the Hong Kong Securities and Futures Commission (SFC) indicates that Hong Kong's future Bitcoin spot ETF market is expected to have various redemption methods, including cash and physical. This differs from the U.S. Bitcoin spot ETFs, which are limited to "cash" redemption only.

"Halving" expectations cause disturbances, with spot prices experiencing significant volatility.

In the international market, in 2021, the U.S. Securities and Exchange Commission (SEC) approved the first futures Bitcoin ETF.

The launch of Ethereum ETFs occurred in 2022, with Canada being the first to approve the world's first Ethereum ETF, followed by the U.S. approving futures Ethereum ETFs.

In early January 2024, the U.S. Securities and Exchange Commission approved the listing of 11 Bitcoin spot ETFs, leading to a significant influx of funds that drove up the price of Bitcoin.

Since 2024, the total market value of cryptocurrencies has exceeded $2.53 trillion, with the largest cryptocurrency, Bitcoin, seeing the most significant increase, achieving a 69% gain in the first quarter of the year. Spot Bitcoin ETFs are a driving factor in the price increase, with inflows exceeding $12 billion in the first quarter. Spot Bitcoin ETFs currently hold 831,000 Bitcoins, valued at approximately $59 billion.

The current Bitcoin price has fallen by more than 10% from its historical high of $73,798 in mid-March, with overall capital flows into spot ETFs tightening.

The latest report from Messari points out that although Bitcoin saw a significant increase in the first quarter of this year, the price has since corrected, and the inflow of funds into spot ETFs has slowed.

According to statistics from HODL15Capital, on April 15th, the net outflow of U.S. spot Bitcoin ETFs was $37 million.

In addition, the anticipation of Bitcoin's "halving" event continues to disturb the market, with speculative sentiment being strong, which is also a reason for the significant short-term price fluctuations of Bitcoin.Public information indicates that the Bitcoin "halving" refers to the halving of new block rewards, which occurs approximately every four years. Data from BTC.com shows that Bitcoin is approaching its fourth block reward halving, with 996 blocks remaining, and the halving is expected to occur on April 20th. Prior to this, Bitcoin has experienced three "halvings" in 2012, 2016, and 2020.

Traders caution that against the backdrop of slowing spot ETF capital flows and increasing market volatility, the future trajectory of Bitcoin is fraught with uncertainty. Investors need to closely monitor market dynamics and make decisions cautiously.