Hong Kong Bitcoin ETFs See First Exits Since Launch

Hong Kong Bitcoin ETFs experienced their first setback after launch on April 30, after their first daily BTC outflows accumulated on Monday.

The outflow came from the China Asset Management Bitcoin ETF, while the rest of the Hong Kong-based products had no flows.

Hong Kong ETFs see modest inflows

China’s 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 “zero” flows apart from the Bosera Ethereum ETF, which received 3.2 million inflows on Monday.

Following their launch last week, the three Hong Kong Bitcoin ETFs amassed $262 million in assets under management (AUM) in their first week.

Despite these significant AUM figures, asset inflows for Hong Kong Bitcoin and Ethereum ETFs totaled less than $14 million in their first week of launch. That number pales in comparison to the billions of dollars that flowed into local US Bitcoin ETFs in January.

Meanwhile, local Hong Kong Ethereum ETFs, the first of their kind in the world, did not make a significant impact, with a combined $54.2 million in AUM and total inflows of $9.3 million in 6 of May

Hong Kong ETF performance concerns

Despite the underwhelming performance of Hong Kong spot ETFs, Bitcoin saw a weekend rally, now trading near $64,000, down from $57,000 last week.

Eric Balchunas, senior analyst at Bloomberg ETF advised investors do not expect substantial numbers in Hong Kong compared to the US market. He explained that the $310 million AUM of Hong Kong ETFs is equivalent to $50 billion in the US market. Therefore, these ETFs are already as important in their local market as the US ones are in theirs.

Hong Kong’s equity sector is relatively small, with a total market capitalization of $4.5 trillion, compared to $50 trillion of shares listed on all US exchanges. In addition, Hong Kong’s equity sector faces liquidity challenges due to slower economic growth in mainland China since 2022.

In a recent study conducted by cryptocurrency exchange OSL, nearly 80% of Hong Kong’s crypto-savvy investors intend to invest in the new local Bitcoin and Ethereum ETFs. However, these assets are currently inaccessible to Mainland Chinese investors unless they are also domiciled in Hong Kong. In particular, this restriction could lead to lower transaction volumes for ETFs than in the United States.

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