Bitcoin ETFs in Hong Kong faced their first setback after launching on April 30, with the China Asset Management Bitcoin ETF experiencing its first daily outflow on Monday. According to Farside data, the China AMC Bitcoin ETF saw an outflow of $4.9 million. While other Hong Kong-based products did not see any flows, the Bosera Ethereum ETF did experience a 3.2 million inflow on the same day.
Despite amassing $262 million in assets under management (AUM) in their first week, the Bitcoin and Ethereum ETFs in Hong Kong saw relatively low inflows totaling less than $14 million during their launch week. This is significantly lower than the billions of dollars that flowed into U.S. spot Bitcoin ETFs in January. The Hong Kong spot Ethereum ETFs, the first of their kind in the world, also had limited impact with $54.2 million in AUM and $9.3 million in total inflows as of May 6.
Senior Bloomberg ETF analyst Eric Balchunas warned investors not to expect substantial numbers in the Hong Kong market compared to the U.S. market. He highlighted that the $310 million AUM for Hong Kong ETFs is equivalent to $50 billion in the U.S. market, indicating that these ETFs are already significant in their local market. With the Hong Kong equities sector having a smaller market cap of $4.5 trillion compared to the $50 trillion in U.S. equities, liquidity challenges are present due to slower economic growth in mainland China.
A study by crypto exchange OSL revealed that nearly 80% of crypto-savvy investors in Hong Kong are interested in investing in the new spot Bitcoin and Ethereum ETFs. However, mainland Chinese investors are currently unable to access these assets unless they also hold Hong Kong residency. This restriction could potentially lead to lower transaction volumes for the ETFs compared to the United States.
Overall, the initial performance of Hong Kong’s Bitcoin ETFs may have fallen short of expectations, but the market dynamics and restrictions in place highlight the unique challenges faced by these products in the region. As the market continues to evolve and regulations possibly change, the future of Bitcoin and Ethereum ETFs in Hong Kong remains uncertain.
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