Good morning, Asia. This is what makes news in the market:
Welcome to Asian morning briefings, daily summary of top stories throughout the US time, and an overview of market movements and analysis. For a detailed overview of the US market, see Coindesk’s Crypto Daybook Americas.
Data from Coinshares continues to highlight the gap in investor enthusiasm between the US and Hong Kong when it comes to Bitcoin
According to Coinshares, US digital asset products generated $4.36 billion inflows last week, accounting for almost the entire global total of $4.39 billion. In Hong Kong, the inflow into Crypto ETFs was only $14.1 million (USD).
The disparity arises despite strong demand for exchange trade products across Hong Kong. Hong Kong-listed ETFs saw net inflows of approximately $880 million (USD) from July 14th to 18th, according to data from Hong Kong’s exchanges and clearing. A large portion of this capital is invested in stock-centric funds tracking local equity and sector themes, with crypto accounting for just 1.6% of the total inflow of ETFs.
Even within the US, when Equity ETF saw a net outflow of $11.75 billion, the bond fund that brought in $5.55 billion ignored the trend by withdrawing capital at a record-breaking pace.
Contrast highlights the growing importance of crypto as a clear asset class in the US portfolio, but in Hong Kong investors continue to see it as a niche asset class.
However, there may be paths that can be formed that can shift dynamics.
In February’s consensus Hong Kong, Yifan HE, CEO of Red Date Technology, proposed a regulatory route that could potentially expose mainland Chinese investors to crypto without breaking the mainland Chinese crypto ban.
Speaking on stage, he pointed out the Qualified Domestic Institutional Investor (QDII) program. A similar structure, he argued, could be adapted to Hong Kong’s spot Bitcoin and etheric ETFs.
In this model, mainland investors do not hold crypto directly, but they gain exposure through licensed intermediaries and reflect the way they currently trade stocks in Hong Kong or overseas.
“If they have a system of buying and selling with yuan, but don’t move money outside of China, it’s just a regulated investment product,” he said.
Capital control remains a core barrier, but the proposal reflects a change in Beijing’s tone.
“There’s a signal from financial regulators,” he said at the time. “They are beginning to talk about Bitcoin. We say we need to pay more attention and do more research on digital assets.”
This means China will not decrypt it, but will integrate it within an approved sandbox. Such a move could dramatically increase Hong Kong’s participation in crypto ETFs. This has struggled to gain traction despite strong infrastructure and regulatory clarity.
But for now, US control in the crypto fund stream remains uncontrolled. However, if Beijing allows for crypto exposure via Hong Kong ETFs, the flow dynamics in the region could appear to be significantly different over the next few years.
Market movements:
BTC: Bitcoin
It is currently trading above $117,000 and is locked to close range.
ETH: Ethereum
Analysts pointed to signs of a potential shift after months of inadequate performance, which led to nearly $3,800 on Monday, up 13% from the start of the year.
gold: Gold rose 1.2% to $3,391.90 on Tuesday.
Nikkei 225: Japan’s stocks rose as the market resumed on Tuesday, with the Nikkei 225 rising 1.12% to 40,254.18, with investors responding to the loss of the Senate majority in the weekend election.
S&P 500: US stocks were mixed and closed on Monday, but the Nasdaq and S&P 500 still hit fresh record highs.
Other locations in the code:
- Robinhood CEO admits “controversy” in Openai Crypto stock, but doubles it (decryption)
- Pudgy Penguins CEO predicts NFT Mania’s comeback (BlockWorks)
- As crypto markets surge beyond $4 trillion (Coindesk), the Bitgo Files will be released
