Hong Kong’s determined efforts to transform into a premier Asian crypto hub are causing ripples in the digital currency market, particularly for tokens with strong ties to China. Analysts are attributing the recent surge in VeChain (VET) and Neo to this regulatory push, suggesting these tokens are being used as a strategic bet on Hong Kong’s crypto future.
The speculation centers around rumors that Hong Kong regulators might give the green light to spot bitcoin and ether exchange-traded funds (ETFs) as early as next week. This potential development has sent shockwaves through the crypto market, propelling VeChain and Neo to double-digit gains in just the past week. According to The Block’s data, VeChain’s price has spiked, while Neo has witnessed a staggering increase of more than 53%.
Market experts believe that retail investors and high-frequency traders are viewing these China-linked tokens as a way to capitalize on the anticipated growth of the Asian crypto market. “VeChain and Neo are seen as a representation of Asian demand, particularly for retail and fast money traders,” Wintermute analysts explained in an interview with The Block. Notably, Neo has gained the nickname “Ethereum of China” due to its similar functionalities within the Chinese market.
Hong Kong’s embrace of cryptocurrencies, including the issuance of retail crypto licenses in June 2023, appears to be a significant driver of this trend. Wintermute analysts suggest that these developments have placed VeChain, Neo, and potentially Conflux on the radars of active traders seeking exposure to the burgeoning Asian crypto landscape.
The potential approval of spot bitcoin and ether ETFs further fuels the excitement. Bloomberg sources report that a subsidiary of Harvest Fund Management Company, a major Chinese asset manager, is on the verge of receiving approval as an issuer for both bitcoin and ether funds. Additionally, a collaborative effort between Bosera Asset Management and HashKey Capital appears poised to receive similar approval for their own ETF offerings.
This anticipated regulatory shift in Hong Kong has broader implications for the global crypto market, as highlighted by a recent Coinbase report. The report emphasizes the growing influence of markets outside the US on Bitcoin’s price discovery process. Moreover, it reveals that most recent bitcoin purchases are happening outside of US trading hours. The potential launch of spot bitcoin ETFs in Hong Kong could further amplify this trend, potentially opening the door for a wider range of investors to enter the cryptocurrency space.
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