As a crypto investor with experience in both the U.S. and Asian markets, I find the recent developments surrounding Hong Kong’s Bitcoin and Ethereum ETFs intriguing. While it’s disappointing to see the first setback for these new products following their launch, I’m not entirely surprised by the modest inflows.
Hong Kong’s Bitcoin ETFs encountered their initial disappointment since debuting on April 30, marked by their first collective withdrawal of bitcoin on Monday.
As an analyst, I’ve observed that the China Asset Management Bitcoin Exchange-Traded Fund (ETF) was the source of recent outflows, whereas the other Bitcoin-related products based in Hong Kong experienced no net inflows or outflows during the same period.
Hong Kong ETFs See Modest Inflows
As a researcher examining the latest data from Farside, I’ve discovered that the China AMC Bitcoin ETF experienced an outflow of approximately $4.9 million on Monday. In comparison, the other Bitcoin and Ethereum ETFs stationed in Hong Kong reported no inflows or outflows for the day, except for Bosera Ethereum ETF, which attracted roughly 3.2 million dollars in new investments on Monday.
Within a week of their debut, the three Bitcoin ETFs based in Hong Kong collectively managed assets valued at $262 million.
Although the assets under management (AUM) for Hong Kong’s Bitcoin and Ethereum ETFs were substantial, the inflow of new assets during their initial week was insignificant, totaling under $14 million. In contrast, U.S. spot Bitcoin ETFs experienced a massive influx of funds to the tune of billions of dollars in January.
During this period, the Ethereum exchange-traded funds based in Hong Kong, which are the first of their kind globally, did not produce substantial results. The combined assets under management amounted to $54.2 million, and a total of $9.3 million was invested as of May 6th.
Hong Kong ETF Performance Concerns
In contrast to the lackluster showing of Hong Kong exchange-traded funds for real estate, Bitcoin saw a notable increase over the weekend. The cryptocurrency is currently hovering around $64,000, marking a significant leap from its price below $57,000 just a week ago.
As a crypto investor following the market trends, I’d like to share some insights from Senior Bloomberg ETF analyst Eric Balchunas. He suggests that investors should not anticipate huge numbers in the Hong Kong market compared to the US one when it comes to ETFs (Exchange-Traded Funds). To put things into perspective, the $310 million Assets Under Management (AUM) of Hong Kong ETFs translates to an equivalent of $50 billion in the US market. Therefore, these Hong Kong ETFs are already significant players in their local market, comparable to the mighty presence of US ETFs in theirs.
The Hong Kong stock market is relatively modest in size, with a combined value of $4.5 trillion for all its companies, versus the massive $50 trillion market capitalization of American stocks collectively. Furthermore, the Hong Kong stock market has encountered difficulties in maintaining sufficient liquidity due to China’s economic deceleration since 2022.
Approximately 80% of experienced crypto investors in Hong Kong plan to invest in the newly launched Bitcoin and Ethereum ETFs according to a recent study by OSL exchange. However, these financial instruments are not accessible to mainland Chinese investors without additional requirements such as Hong Kong residency. Consequently, this limitation could result in lower trading volumes for the ETFs compared to those in the US market.
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2024-05-07 20:44