Bitcoin is up 69% this year! Public offering funds end up 'currency speculation' | Krypton Finance
36 krypton Pro
Is Bitcoin becoming a growth asset?
By Wang Xianyu / tr. by Robert Taylor
Editor | Pan Xinyi
Cover Source | IC photo
May 21Pennbattle38000reelBitcoin is back at $71000. Market data show that as of 16:15 Beijing time, the price of Bitcoin was 70978.Pennbattle38000reel.5 US dollars, up 6.21% on the day, about 68.59% higher than at the beginning of the year.
Meanwhile, the 90-day correlation between Bitcoin and the Nasdaq 100 reached 0.46 last week, the highest level since the end of August last year, according to Bloomberg.
The Nasdaq 100 index focuses on technology stocks and usually reflects the performance of high-growth technology stocks in the U. S. market. Therefore, the correlation coefficient between Bitcoin and the Nasdaq 100 index can be regarded as a statistical indicator of the linear correlation between Bitcoin and technology stocks. A positive coefficient means that the trend of the two is similar.
The recent strong growth in the price of Bitcoin, superimposed with increased correlation with technology stocks, has led some supporters to see Bitcoin as a growth asset.
Since the beginning of this year, a number of markets around the world have approved the listing of Bitcoin ETF, giving investors more ways to invest in Bitcoin and reducing the threshold and risk for investors to own Bitcoin directly.
In January, the Securities and Exchange Commission approved 11 spot bitcoin ETF for the first time, and then 11 ETF began listing on January 11. In April, the SFC approved the listing of six virtual currency spot ETF, including three bitcoin ETF, and the simultaneous listing of six ETF on April 30.
Compared with the current "growth assets" argument, Bitcoin has been known as "digital gold" in the past. Because of its limited volume, decentralization, and the ability to hold and transfer value, Bitcoin is seen by some investors as a store of value against global economic uncertainty and inflation.
However, in the face of risky events, Bitcoin is not as independent of the market as its fans think. For example, during local conflicts in early 2022, Bitcoin plummeted.
With the latest investment boom in Bitcoin, is it time to enter the market? High volatility is still a significant difference from long-term stable assets such as gold, so how do you decide to invest in bitcoin?
Public offering funds will "speculate on coins" in the next game.
At present, the virtual currency ETF listed in Hong Kong comes from the Hong Kong subsidiaries of Huaxia Fund, Bosch Fund and Castrol Fund.
Compared with bitcoin ETF, which is listed in the United States, several funds in the Hong Kong market are relatively small, ranging from tens of millions of dollars to hundreds of millions of dollars. However, as the first batch of virtual currency spot ETF in the Asian market, it still has representative significance.
Talking about the reasons why public offering funds have recently launched virtual currency spot ETF in the Hong Kong market, economist and new financial expert Yu Fenghui told 36 krypton that Hong Kong, as an international financial center, has gradually become clear about the regulatory attitude towards cryptocurrency in recent years. For example, the application process of the encrypted currency trading platform is clarified through legislation to improve the compliance requirements. This creates conditions for the launch of compliant ETF products.
Investors' interest in encrypted currency continues to grow. Spot ETF, as a more convenient and secure investment channel, can meet the needs of investors who want to hold encrypted currency indirectly without directly participating in encrypted currency transactions.
For fund companies, the launch of cryptocurrency ETF is an important strategy to enrich the product line, attract customers with different investment preferences and increase the scale of asset management, "especially in a market environment where returns on traditional asset classes are likely to be low".
"as bitcoin ETF has been approved in several markets around the world, fund companies in Hong Kong also hope to remain competitive and grab market share by launching similar products." Yu Fenghui added
For the follow-up forecast, Huaxia Fund Hong Kong said that the US CPI was lower than expected, opening the interest rate cut window, and two interest rate cuts are expected this year, one in September and the other in November or December. The market rally last week (May 6-12) reflects only one of the interest rate cuts, which are expected to provide positive support for all risky assets. "
In addition, from the product side and capital flow side, bitcoin spot ETF has received more capital inflows from traditional investment companies, such as Apollo Management investing in Ark BTC spot, which provides a positive factor compared with the trend of bitcoin spot ETF in the short term.
Choose the time to enter carefully
By buying shares of ETF products, investors can indirectly hold assets corresponding to the spot bitcoin, without in-depth understanding of the trading mechanism of cryptocurrency and the possible security risks of cryptocurrency transactions. They can share the investment income from the rising price of bitcoin.
And the rate of related products is low, which increases the return on investment to a certain extent. For example, the annual management fee of bitcoin ETF listed in the United States is basically between 0.2% and 1.5%, while that of bitcoin and Ethernet coin listed in Hong Kong is between 0.3% and 1%.
Boshi International also said that in order to thank investors for their support, its two bitcoin and Ethernet coin ETF will be free of management fees for the first four months from April 30, 2024 to August 31, 2024.
On the other hand, past price movements also show strong fluctuations in the price of bitcoin.
When Bitcoin was first launched in 2009 and 2010, for example, the price of each bitcoin was less than $1, rose to more than $30 in the first half of 2011, and fell back to about $3 in the second half of that year.
Since then, the price of each bitcoin has risen from more than $200 to $13000 in 2015-2017, but has fallen back to $3000-$4000 several times since then.
Despite the lengthening of the time period, the rate of return on Bitcoin is extremely high. If you buy from about $31000 in May 2022 and sell when it rises to about $71000 in May 2024, the annualized rate of return can reach 51.3%.
But if you enter at the wrong time, you may lose a lot. If investors buy it for about $60,000 in October 2021, their bitcoin holdings will fall to about $20,000 a year later.
Therefore, Yu Fenghui also mentioned that when investing in virtual currency spot ETF products, investors should establish a correct risk awareness, understand the high volatility of the cryptocurrency market, prices may change sharply in a short period of time, and risk management should be done.
At the same time, although ETFs provide higher liquidity than buying cryptocurrencies directly, investors should also pay attention to the trading volume of the product to ensure that they can easily buy and sell when needed. Moreover, the emerging cryptocurrency ETF market may not be as mature as traditional financial markets, and investors need to continue to pay attention to market dynamics and product innovation.
In addition, in Yu Fenghui's view, the decisions of regulators may also affect the operation or market acceptance of ETFs. Therefore, investors are advised to pay attention to possible changes in the policy environment and understand how fund companies store and protect their cryptocurrencies and ensure asset safety.
Looking back at the price increase this year, Yu Fenghui believes that virtual asset prices are mainly affected by global macroeconomic conditions and institutional investor dynamics.
"Economic growth expectations, monetary policy adjustments (such as interest rate changes), inflation rates and geopolitical tensions will all affect the role of cryptocurrencies as safe-haven assets or risky assets, and in turn affect their prices." He mentioned. For example, in an environment of loose monetary policy and high inflation, cryptocurrencies are seen as an alternative to traditional currencies that fight devaluation.
At the same time, institutional investors such as large financial institutions, enterprises and sovereign wealth funds have increased their acceptance of cryptocurrencies. By directly investing or launching related financial products, such as Bitcoin ETFs, market liquidity and legitimacy have been increased, thus pushing up Bitcoin price.
In addition, Yu Fenghui believes that the advancement of blockchain technology and the increased adoption of cryptocurrency in payments, DeFi (decentralized finance) and other practical application scenarios have enhanced its intrinsic value and supported price increases.
In this process, social media, celebrity effects and market news can also quickly affect market sentiment, leading to short-term price fluctuations. "Positive news and market optimism tend to attract more investors into the market, pushing prices higher."
In addition to focusing on macroeconomics, institutional investor trends and the application of blockchain technology for future-oriented virtual currency ETF investment, Yu Fenghui believes that the regulatory policies of various governments on cryptocurrencies also need to be taken into account. Such as whether it is allowed as a means of payment, tax rules, exchange supervision, etc. These changes will directly affect the behavior and market access of market participants, and in turn affect the prices of virtual assets.