Will trading open on April 30? A sneak peek at the Hong Kong Bitcoin spot ETF IPO guide

According to Bloomberg, Hong Kong Bitcoin and Ethereum spot ETFs will be open for trading on April 30. Eligible individual investors can also participate, and there are only a few days left. Are you ready to participate in the "new listing"? This article is purely for sharing dry goods, so save it quickly!

Background information

The purpose of new listings is arbitrage, which is also considered investment.

Hong Kong Bitcoin spot ETF supports physical subscription (subscription with Bitcoin) and cash subscription.

It also includes over-the-counter subscription (subscription of fund shares through fund companies and securities companies) and on-site purchase (purchase in the secondary market of the Hong Kong Stock Exchange, with a securities code).

Based on the current market situation, only three fund companies have issued Bitcoin spot ETFs and Ethereum spot ETFs, namely China Asset Management, Harvest Asset Management and Bosera Asset Management.

When to subscribe for new shares

ETF listings are divided into IOP (initial offering phase) over-the-counter subscriptions and post-listing subscription transactions. Subscriptions for new shares occur during the IOP period before listing, and can be sold in the secondary market on the day of listing. It is a bit like subscribing for stocks at an IPO and selling them at the opening. Or Binance's IEO subscription, if you grab the opening sale and sell it, you will make a profit.

Why Bitcoin ETF can make a profit

Currently, only a few Hong Kong brokerages with virtual asset retail licenses can subscribe to Hong Kong Bitcoin ETF (PD/distributors). After the ETF is listed on the Hong Kong Stock Exchange and obtains a stock code, all hundreds of Hong Kong brokerages and banks can purchase it. It is similar to the fact that there are few brokerages that can participate in the primary market, so the amount of subscription funds is small. When the market opens in the secondary market, there are more brokerages that can purchase, and the amount of funds is large, so the price is naturally driven up. In addition, the IOP life before listing is short, so not many people buy the goods, and the number of people selling in the secondary market is far less than the number of people buying, so there will be a premium on the ETF on and off the market.

In other words, the fewer people subscribe in the primary market, the less funds, the more people buy in the secondary market, the larger the funds, and the greater the profit space.

It is said that the US Bitcoin ETF had a 10% premium on the opening day, and it was in the case of pure cash subscription (the United States does not support physical subscription).

What are the risks?

Everyone knows that virtual currency is very risky. This time, the Bitcoin ETF is jointly participated by the Hong Kong Stock Exchange, well-known fund companies, licensed exchanges, and licensed virtual asset brokers, and the security of virtual currency is guaranteed.

In terms of trading risks, the money earned from new listings is a stable arbitrage, rather than the profit and loss affected by the rise and fall of prices.

How to achieve arbitrage from new listings?

First of all, the profit and loss risk of cash subscription of Bitcoin ETF is equivalent to directly purchasing Bitcoin, which is completely tracking the impact of Bitcoin price fluctuations.

However, what will happen if you use Bitcoin to subscribe to Bitcoin ETF, that is, physical subscription?

Because Bitcoin and Bitcoin ETF have a fixed exchange ratio, if you successfully subscribe to Bitcoin ETF in the IOP stage, when the Hong Kong Stock Exchange opens, if the premium is high enough, you can sell it in Hong Kong dollars on the Hong Kong Stock Exchange, and then buy back Bitcoin at the same time to earn the difference between the over-the-counter and the on-the-counter price.

If there is no premium on or off-the-counter, or the over-the-counter price is expensive, then redeem it in kind. If you start subscribing with 100 Bitcoins, you will still redeem 100 Bitcoins, and you will not lose money.

This is the basic logic of Bitcoin ETF on-the-counter and off-the-counter arbitrage.

Having said so much, how do you operate it?

Currently, physical subscription of ETF with Bitcoin (Ethereum) can only be done through Victory Securities!

Victory Securities (HK8540) is a 50-year-old listed securities firm in Hong Kong. It is also the securities company that currently has both cash subscription and physical subscription of Bitcoin. In addition, Victory Securities is the first securities firm in Hong Kong approved by the Securities and Futures Commission to allow currency in and out. It is reported that Victory Securities also has an exchange in Hong Kong that is applying for a license, which can be said to be a far-reaching layout.

How to subscribe to the new Bitcoin spot ETF

First, you need to open an account or transfer an account. You can directly download VictoryX to register and open an account. Remember to confirm the subscription quantity and amount by email during IOP. You can directly trade Hong Kong stocks, US stocks and virtual currencies without opening a virtual currency exchange account. It is quite convenient. You don’t need to exchange U at OTC. You can directly recharge your bank card or deposit Bitcoin.

The most convenient operation process is as follows:

(1) Open an account at Shengli Securities;

(2) Make sure there is enough money in your securities account to subscribe to ETFs. You may need to transfer funds or coins to your account in advance so that you can quickly participate in the ETF IOP;

(3) Subscribe to Bitcoin ETF shares in cash, or deposit Bitcoin/Ethereum to subscribe to ETF shares and become a holder;

(4) When the ETF is first listed, you can sell it for arbitrage.

‍I hope that this time, the Hong Kong Bitcoin ETF will once again set off a wave of new Hong Kong stock listings. Hong Kong can be said to have surpassed the United States, Japan, South Korea and Singapore in the virtual asset track. Industry experts predict that the market value of Hong Kong Bitcoin ETF is expected to exceed HK$100 billion this year.

Note: The so-called subscription of new shares or new shares actually refers to the subscription of Hong Kong Bitcoin spot ETF (also known as Bitcoin spot exchange-traded open-end index fund). In the industry, people often use terms such as "new shares" or "new share subscription" to describe this behavior. It should be noted that when participating, please fully understand the relevant risks and make investment decisions prudently.