Arrival of spot bitcoin ETFs in Hong Kong: what are the first conclusions to draw?

Since April 30, three managers have launched 6 bitcoin and ether spot ETFs in Hong Kong. Investors nevertheless remain more cautious than in the United States.

After spot bitcoin ETFs in the United States, the Hong Kong financial center embarked on the adventure last Tuesday, with 6 six funds issued by three managers: Bosera Funds, China Asset Management (the subsidiary in Hong Kong) and Harvest Global Investments. Each company offers a bitcoin ETF and a spot ether ETF. Transactions can be made in Hong Kong dollars or US dollars, with China AMC also allowing transactions in yuan.

Since their introduction, the three bitcoin-backed funds have seen a decline in inflows, with $240 million in positive flows on the first day of trading, compared to $10.3 million and $8.01 million on the following two days. The China AMC has established itself as the leader in the spot ETF market, with its two funds occupying more than 67% of the market share. However, its bitcoin fund recorded $75.36 million in negative flows this Monday, for the first time since its introduction.

In Hong Kong, which intends to become an international crypto hub, these financial products are therefore making a less sensational entrance than in the United States. As a reminder, all American spot ETF funds recorded $4.5 billion in positive flows during their first day of trading. These funds “are not expected to attract the same level of demand as those in the United States,” anticipated CCData, a digital asset analysis company.

Towards authorizations in other countries?

However, “industry experts believe they could encourage other countries to approve cryptocurrency ETFs and could help promote broader adoption of digital assets,” according to the firm.

On January 10, the American stock market watchdog (the SEC) has authorized 11 spot bitcoin ETFs, including that of Blackrock and Fidelity. An ETF (or Exchange Traded Funds) is an index fund trading on a stock exchange which follows the evolution of a stock index (or one or more financial or physical assets, such as gold) by replicating the increase as well as the drop in the price of this index (or these assets).

The arrival of these new financial products has had an impact on the price of the queen of cryptocurrencies. Since the start of the year, the price of bitcoin has jumped 60%, including 53% over the last three months. After spot bitcoin ETFs were allowed on the market, investors are hoping that the SEC will approve spot ether ETFs later this year.