Hong Kong’s Bitcoin ETFs faced their first challenge since launching on April 30, with the China Asset Management Bitcoin ETF experiencing its first cumulative daily BTC outflows on Monday. This outflow amounted to $4.9 million, according to Farside data, while other Hong Kong-based products did not see any significant flows.
Despite amassing $262 million in assets under management (AUM) within their first week of launch, the asset inflows for Hong Kong’s Bitcoin and Ethereum ETFs were less than impressive, totaling less than $14 million. This is a stark comparison to the substantial billions of dollars that flowed into U.S. spot Bitcoin ETFs back in January.
Senior Bloomberg ETF analyst Eric Balchunas noted that the $310 million AUM of the Hong Kong ETFs is equivalent to $50 billion in the U.S. market. While the Hong Kong equities sector is significantly smaller in market cap compared to the U.S. market, these ETFs are still substantial within their local market.
The Hong Kong equities sector faces liquidity challenges due to slower economic growth in mainland China since 2022. This has impacted the performance of the Hong Kong spot ETFs despite the growing interest in cryptocurrencies among investors in the region.
One significant restriction is that mainland Chinese investors do not have easy access to the new spot Bitcoin and Ethereum ETFs unless they also hold Hong Kong residency. This limitation could potentially lead to lower transaction volumes for the ETFs in comparison to the United States.
While Hong Kong’s Bitcoin ETFs initially showed promise with their impressive asset accumulation, the lower than expected inflow figures and challenges in the local market highlight the complexities of the cryptocurrency investment landscape in the region. As the market continues to evolve, it will be interesting to see how these ETFs adapt and grow in the future.
