The market is waiting for a "boost": Hong Kong virtual asset spot ETF

The cryptocurrency market was sluggish in weekend trading, with Bitcoin continuing to trade below $63,000 on Monday, as investors await the upcoming opening of Hong Kong's virtual asset ETF to bring more liquidity to the crypto market. However, analysts warned that the lack of positive catalysts could cause the price of the currency to continue to fall amid growing concerns about inflation in the United States.

According to Bitpush data, Bitcoin fell below the support level of $63,600 in the early hours of Monday morning and fell to an intraday low of $61,750 in the afternoon. The influx of bulls prevented further pullbacks, and Bitcoin briefly rebounded above $63,000. As of the time of writing, it fell below $63,000 again, down 1% in 24 hours.

Altcoins have been hit hard amid Bitcoin weakness, with only 10 of the top 200 tokens by market cap posting gains on Monday. Amp ( AMP ) was the standout performer, up 18.75%, followed by BinaryX (BNX) at 6.4% and Helium (HNT) at 5.7%.

The current overall cryptocurrency market capitalization is $2.32 trillion, with Bitcoin’s market capitalization dominance at 53.4%.

U.S. stocks traded in a volatile session, trending higher at the open before coming under pressure to fall, with the major indexes losing gains near midday. The downgrade came after the U.S. Treasury Department raised its estimate of federal borrowing for the current quarter by $41 billion to $243 billion.

As a result, the 10-year Treasury yield fell to 4.613% earlier in the trading day before recovering to 4.65%. It has since moved lower and is trading at 4.607% at the time of writing. At the close, the S&P, Dow Jones and Nasdaq all closed higher, up 0.32%, 0.38% and 0.35% respectively.

Hong Kong Spot Crypto ETF is about to debut

Hong Kong's spot Bitcoin and Ethereum ETFs will begin trading on Tuesday morning local time, and as of press time, the price and volume of the currency have not yet seen a similar enthusiastic reaction to the U.S. spot Bitcoin ETF at the time. In the three months before the U.S. spot Bitcoin ETF debuted on January 11, the price of BTC almost doubled, and a large amount of capital inflows stimulated BTC to break through $73,000 in March.

However, Hong Kong issuers expressed confidence. According to Zhitong Finance, Zhu Haokang, head of digital asset management and family wealth management at China Asset Management (Hong Kong), said that except for Grayscale, the other 10 US Bitcoin spot ETF issuers issued a total of US$125 million on the first day of issuance on January 10 this year. The first issuance scale of the three issuers in Hong Kong will exceed this figure, and China Asset Management will be the largest among the three.

Unlike US products, Hong Kong spot ETFs allow cash and physical subscription or renewal. China Asset Management's ETF is the only one that provides three counters in US dollars, Hong Kong dollars and RMB, and is also the only ETF issuer with unlisted shares. Many traditional crypto asset investors have actively participated in its IOP (initial offering) stage. Bitcoin miners, regions outside Hong Kong such as Singapore and the Middle East, and local family offices are all interested in investing in its ETFs.

Analysts predict that the asset management scale of Hong Kong's spot Bitcoin and Ethereum ETFs is expected to reach US$1 billion in the future, but whether this goal can be achieved still needs time to test.

Focus on key economic data this week

Looking at the broader market, Secure Digital Markets said: “Market focus is on upcoming corporate earnings, important employment data and the Federal Reserve meeting.”

They noted: “Earnings focus this week includes major reports from PayPal and Amazon on Tuesday, and from Apple, Coinbase and Block on Thursday. Monetary policy will also be in the spotlight, with the Federal Reserve expected to keep interest rates unchanged on Wednesday. Although no change in rates is expected, investors will pay close attention to what Chairman Jerome Powell says in the subsequent press conference.”

“This expectation is formed ahead of Friday’s release of the April nonfarm payrolls report, a key indicator of labor market strength and a key factor in the Fed’s policy decision and overall economic assessment,” the analysts concluded.

Bullish target: Above $67,500

“Bitcoin is currently trending down, with lower highs and lower lows on the intraday chart and rebounding from today’s low of $61,800. It remains suppressed below the 20-day and 50-day moving averages, indicating bearish momentum,” the analyst said.

Uncertainty about the future of interest rates is a major source of volatility. “The combination of weak growth and persistent inflation reduces the likelihood of a Fed rate cut, casting a shadow over risk assets,” the analysts wrote. “Bulls need to rally above $67,500 to regain dominance.”

The reversal in ETF flows also weighed on Bitcoin’s price, translating into weakness across the cryptocurrency market. Bitcoin ETFs saw a massive outflow on Friday, with total outflows totaling $83.6 million, including $82.4 million from Grayscale alone. BlackRock faced a third straight day of no inflows.

Economist and cryptocurrency trader Milkybull Crypto said Bitcoin’s current weakness could be “the last jolt before a rally to the top of the cycle.”

“If you look at the PA in 2017, when it broke a new record, there was a healthy, liquidity-attracting pullback before it bounced back to the top of the cycle,” he said.

Milkybull Crypto added: “The previous consolidation that started from December 2023 to February 2024 also reflects the current consolidation range. MM’s manipulative strategy is to get rid of STH which is very sensitive to price adjustments, especially when the price is below its cost basis. Liquidity contention area: $57k-59k; STH cost basis: $59,788. These are important areas to watch for the final shakeout.”