Hong Kong’s entry into the spot Bitcoin and Ether exchange-traded funds (ETFs) market saw six newly introduced ETFs record a trading volume of HK$87.5 million ($11.2 million) on their first day of trading.
The figure falls extremely short of the $4.6 billion achieved by the 11 spot Bitcoin ETFs in the United States. These new Hong Kong Bitcoin ETFs are managed by China Asset Management, Harvest Global, Bosera, and HashKey.
Hong Kong Bitcoin ETFs Disappoint
The launch of Hong Kong Bitcoin ETFs follows the rising investor interest in virtual asset ETFs since the introduction of VA Futures ETFs in late 2022. With an average daily turnover for VA Futures ETFs surging to $51.3 million in Q1 2024, these ETFs attracted $529 million in net inflows.
Despite the anticipation surrounding their launch, the trading volumes for these ETFs were relatively low compared to their counterparts in the US. According to HKEX data, the China Asset Management (ChinaAMC) Bitcoin ETF had the biggest trading volume, securing HK$37.16 million on the first day. Its Ether ETF trailed behind with HK$12.66 million in volume.
Other ETFs, such as the Bosera HashKey Bitcoin ETF and the Bosera HashKey Ether ETF, saw lower trading volumes, highlighting a subdued market response to the new offerings.
Commenting on the trading volumes, Justin d’Anethan, head of APAC business development at Keyrock, acknowledged the lower figures compared to the US launch but emphasized the positive aspect of decent buy-in, considering Hong Kong’s market dynamics.
“While it’s easy to have overblown expectations — bound to fall short — I actually think the spot ETFs in HK are a success, no near comparable to the launch of spot BTC ETFs in the US, but it’s happening in a very different market dynamic,” said d’Anethan.
He noted that while the volumes didn’t match those of the US, it’s a major step forward for the region.
“The fact that Hong Kong, which doesn’t offer access to mainland China investors (it’s worth remembering), is getting some decent buy-in is positive,” he said.
The lackluster debut of the Hong Kong ETFs coincided with a broader downturn in the cryptocurrency market, with Bitcoin’s price dipping below $60,000. The disappointment in the Hong Kong Bitcoin ETF launch and Bitcoin’s price decline reflects a cautious sentiment among investors amid market turbulence. Despite the setback, industry experts are optimistic about the long-term prospects of cryptocurrency ETFs in Hong Kong.
Hong Kong’s Spot ETFs Launch Was Projected to $300 Million First-Day Inflow
Hong Kong’s inaugural Bitcoin ETFs have attracted considerable anticipation from issuers, with a projected combined first-day inflow of around $300 million.
Issuers are expecting approximately $300 million in combined first-day inflows for the six new Hong Kong spot-crypto ETFs.#HongKong #Bitcoinhttps://t.co/IsrtqqoSUg
— Cryptonews.com (@cryptonews) April 30, 2024
Despite Bloomberg Intelligence’s Rebecca Sin’s cautious estimate that Bitcoin and Ether funds could accumulate around $1 billion in Hong Kong over the next two years, Han Tongli, CEO of Harvest Global, expresses confidence in surpassing this estimate.
He emphasizes the appeal of Hong Kong’s financial products and services, which cater to investors in the West and the East, in contrast to the primarily Western-focused offerings in the US.
Potential sources of demand for Hong Kong’s spot crypto ETFs include Chinese wealth invested in the city and Asia-Pacific crypto exchanges and market makers. While the US Bitcoin funds have attracted global attention, prospective Hong Kong issuers, such as Harvest Global Investments Ltd. and HashKey Capital Ltd., in partnership with Bosera Asset Management (International) Co., may need help achieving the same recognition level.
The successful launch of ETFs in Hong Kong signals a growing interest in digital assets, albeit with initial challenges in trading volume and market volatility. Interest will likely surge in the coming months, and investor sentiment will subside once Bitcoin starts performing well again.
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