Hong Kong's Bitcoin ETFs Cushion American Losses

Hong Kong’s first spot Bitcoin and Ethereum ETFs had a mixed debut on April 30th. Despite modest trading volumes, experts see long-term potential for this promising new market.

Crypto ETFs in Hong Kong Start Softly But With Optimism

April 30, 2024, marks a key date for crypto finance in Asia with the highly anticipated launch of 6 spot Bitcoin (BTC) and Ethereum (ETH) ETFs at the Hong Kong Stock Exchange. Issued by major players such as China Asset Management, Bosera HashKey, and Harvest International, these products offer direct exposure to cryptocurrencies.

However, the results from the first day turned out to be mixed. While Bitcoin-backed ETFs largely outperformed, with increases of up to 1.8% for the Bosera Hashkey Bitcoin ETF, their Ethereum counterparts faced slight losses. ChinaAMC’s CAM Ether ETF in particular lost 0.78%.

Despite these disparities, the CAM Bitcoin ETF stood out with $123.61 million in assets under management according to Bloomberg Intelligence, making it the largest debut of the day.

Meanwhile, Bosera Hashkey’s ETFs attracted $70.34 million, including 964 BTC and 4,290 ETH according to Arkham Intelligence. Encouraging figures despite a trading volume lower than observer expectations.

Diverse Strategies and Unexploited Potential

While the start might seem lackluster, Bloomberg analyst Eric Balchunas sees huge potential on a local scale. With $141 million in inflows on the very first day, these Bitcoin ETFs are expected to offset the negative flows in the USA, according to him.

Moreover, many expect strong interest from Chinese investors for this new market that is more accessible than the USA. To stand out in this competitive new market, issuers have adopted various pricing strategies.

Harvest International is betting on very low management fees at 0.3%, reduced to zero for the first six months. ChinaAMC, on the other hand, applies the standard rate of 0.99% with terms specific to each client.

Beyond fee differences, these ETFs significantly enrich the offering for investors in Hong Kong. Available in HK dollar, US dollar, or renminbi, they are open to both retail and institutional investors, including international ones under certain conditions. Only Mainland China remains on the sidelines for now.

While experts remain measured on the immediate impact of these launches, many see them as an important milestone for the growth of crypto finance in Asia. For Guillermo Fernandes of Blockpliance, the approval of Ethereum ETFs before the United States is a strong signal, even if the US market maintains the advantage of size and liquidity to attract large investors.