The spot Bitcoin and Ethereum ETFs in Hong Kong will start trading on Tuesday morning local time.
Author: Mary Liu, BitpushNews
The cryptocurrency market performed sluggishly over the weekend, with Bitcoin trading below $63,000 on Monday. The opening of the Hong Kong virtual asset ETF is imminent, and investors are waiting for it to bring more liquidity to the crypto market. However, analysts warn that the lack of positive catalysts may lead to further price declines amid increasing concerns about US inflation.
Data from Bitpush shows that Bitcoin broke below the support level of $63,600 on Monday morning, dropping to an intraday low of $61,750 in the afternoon. The influx of bulls prevented further decline, briefly pushing Bitcoin back above $63,000, but at the time of writing, it once again fell below $63,000, with a 1% decrease in the past 24 hours.
In the weak Bitcoin market, altcoins suffered heavy losses. On Monday, only 10 out of the top 200 tokens by market capitalization saw gains. Amp (AMP) performed the best with an 18.75% increase, followed by BinaryX (BNX) with a 6.4% increase, and Helium (HNT) with a 5.7% increase.
The total market capitalization of cryptocurrencies is currently $2.32 trillion, with Bitcoin's dominance at 53.4%.
US stocks experienced significant volatility, opening on an upward trend but later coming under pressure and losing gains around midday. This downturn occurred after the US Treasury Department raised its estimate for federal borrowing this quarter by $41 billion to $2.43 trillion.
As a result, the 10-year Treasury yield fell to 4.613% earlier in the trading day before rebounding to 4.65%. It continued to decline and was trading at 4.607% at the time of writing. At the close, the S&P, Dow, and Nasdaq all ended higher, rising by 0.32%, 0.38%, and 0.35% respectively.
Spot Crypto ETFs in Hong Kong Set to Debut
The spot Bitcoin and Ethereum ETFs in Hong Kong will start trading on Tuesday morning local time. At the time of writing, there has not been a similarly enthusiastic response in terms of price and trading volume as seen with the US spot Bitcoin ETF on January 11. In the three months leading up to the debut of the US spot Bitcoin ETF, BTC's price nearly doubled, with a large influx of funds driving BTC to surpass $73,000 in March.
However, the issuers in Hong Kong are confident. According to a report by China Fund, Zhu Haokang, head of digital asset management and family wealth management at Huaxia (Hong Kong), stated that apart from Grayscale, the other 10 US spot Bitcoin ETF issuers raised $125 million on the first day of issuance on January 10 this year. The initial issuance scale of the three issuers in Hong Kong will exceed this figure, with Huaxia Fund having the largest scale among the three.
Unlike the US products, the spot ETFs in Hong Kong allow cash and physical purchases or redemptions. Huaxia's ETF is the only one that offers counters in US dollars, Hong Kong dollars, and Chinese yuan, and it is also the only issuer with non-listed shares. Many traditional cryptocurrency investors have actively participated in its IPO (initial offering phase), including Bitcoin miners, entities outside Hong Kong such as Singapore and the Middle East, and local family offices.
Analysts expect that the assets under management of the spot Bitcoin and Ethereum ETFs in Hong Kong could reach $1 billion in the future, but whether this target can be achieved remains to be seen.
Key Economic Data in Focus This Week
Looking at the broader market, Secure Digital Markets stated, "The market's focus is on upcoming corporate earnings, important employment data, and the Fed meeting."
They pointed out, "This week's earnings focus includes major reports from PayPal and Amazon on Tuesday, and major reports from Apple, Coinbase, and Block on Thursday. Monetary policy will also be in focus, with the Fed expected to announce no change in interest rates on Wednesday. While no change in rates is expected, investors will closely watch Chairman Jerome Powell's remarks at the subsequent press conference."
Analysts summarized, "This expectation was formed ahead of Friday's release of the April nonfarm payrolls report, which is a key indicator of labor market strength and a crucial factor in Fed policy decisions and overall economic assessments."
Bullish Target: Above $67,500
Analysts stated, "Bitcoin is currently showing a downward trend, with high and low points on the intraday chart continuing to decline, and rebounding from today's low of $61,800. It remains under pressure below the 20-day and 50-day moving averages, indicating a bearish trend."
The uncertainty about future interest rates is the main source of volatility. Analysts wrote, "Weak growth combined with persistent inflation reduces the likelihood of a Fed rate cut, casting a shadow over risk assets. Bulls need to rebound above $67,500 to regain dominance."
The reversal of ETF flows also puts pressure on Bitcoin's price, translating into weakness across the entire cryptocurrency market. Last Friday, Bitcoin ETFs saw significant outflows, with a total outflow of $83.6 million, of which Grayscale alone saw an outflow of $82.4 million. BlackRock faced a third consecutive day without inflows.
Economist and cryptocurrency trader Milkybull Crypto stated that Bitcoin's current weakness may be "the last oscillation before rebounding to the cycle top."
He said, "If you look at the price action in 2017, when it broke a new record, you will find that there was a healthy, liquidity-attracting pullback before it rebounded to the cycle top."
Milkybull Crypto added, "The consolidation that started from December 2023 to February 2024 reflects the current consolidation range. MM's manipulation strategy is to get rid of STH, which is very sensitive to price adjustments, especially when the price is below its cost basis. Liquidity battle zone: $57,000 to $59,000; STH cost basis: $59,788, these are important areas to watch during the final shuffle."
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