Hong Kong’s Bitcoin ETFs (BTC) Encounter First Withdrawals Since Inception: A Deep Dive into Crypto Market Trends

• Hong Kong’s Bitcoin ETFs experience their first setback with an outflow from the China Asset Management Bitcoin ETF.
• Despite this, the three Bitcoin ETFs in Hong Kong amassed $262 million in assets under management within their first week.
• However, these figures are modest compared to the billions that flowed into U.S. spot Bitcoin ETFs earlier this year.

Hong Kong’s Bitcoin ETFs face their first hurdle, experiencing an outflow from the China AMC Bitcoin ETF. Despite this, the ETFs have amassed a significant $262 million in assets under management within their first week.

First Outflow for Hong Kong Bitcoin ETFs

The China AMC Bitcoin ETF saw an outflow of $4.9 million on Monday, according to data from Farside. In contrast, the other Bitcoin and Ethereum ETFs in Hong Kong reported no flows, apart from the Bosera Ethereum ETF which saw an inflow of $3.2 million on the same day. Despite these significant assets under management figures, the asset inflows for Hong Kong’s Bitcoin and Ethereum ETFs amounted to less than $14 million during their first launch week. This figure is modest compared to the billions that flowed into U.S. spot Bitcoin ETFs back in January.

Performance of Hong Kong ETFs

Despite the underwhelming performance of the Hong Kong spot ETFs, Bitcoin experienced a weekend surge, now trading close to $64,000, up from below $57,000 last week. Senior Bloomberg ETF analyst Eric Balchunas has advised investors not to expect substantial numbers in Hong Kong compared to the U.S. market. He explained that the $310 million AUM of the Hong Kong ETFs is equivalent to $50 billion in the U.S. market. Therefore, these ETFs are already as substantial in their local market as U.S. ones are in theirs. However, the Hong Kong equities sector faces liquidity challenges due to slower economic growth in mainland China since 2022.

Future Outlook for Hong Kong ETFs

In a recent study conducted by crypto exchange OSL, nearly 80% of crypto-savvy investors in Hong Kong intend to invest in the new spot Bitcoin and Ethereum ETFs. However, these assets are currently inaccessible to mainland Chinese investors unless they also hold Hong Kong residency. This restriction could lead to lower transaction volumes for the ETFs than the United States.

Conclusion

While Hong Kong’s Bitcoin ETFs have experienced their first setback, they have still managed to amass a significant amount in assets under management within their first week. However, with restrictions on mainland Chinese investors and liquidity challenges in the Hong Kong equities sector, it remains to be seen how these ETFs will perform in the long term.