HomeCryptoTwo weeks after their launch, could Hong Kong’s spot Bitcoin ETFs be...

Two weeks after their launch, could Hong Kong’s spot Bitcoin ETFs be a failure?


Spot Bitcoin ETFs recently launched in Hong Kong are struggling to attract investors, unlike their American counterparts. However, can we hope for a renewed interest in these still young investment vehicles?



Could the Hong Kong spot Bitcoin ETFs have arrived at the wrong time?

A little over 2 weeks after their launch, spot Bitcoin ETFs launched in Hong Kong seem to be struggling to attract, especially in comparison with their American counterparts who have already set numerous records. We told you about it earlier this week, the exits recorded on May 13 on these different investment vehicles were such that they literally erased all of the previous entries.

As of May 16, these different spot Bitcoin ETFs total $231 million worth of Bitcoin. A loss of 16 million dollars thereforesince the various issuers accounted for $247.7 million worth of BTC on April 30, the launch day of the ETFs.

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Daily entries and exits on Hong Kong spot Bitcoin ETFs

The lateralization of the Bitcoin price in recent times constitutes a first explanation for the relatively weak enthusiasm around spot Bitcoin ETFs in Hong Kong. Their American counterparts have also experienced a period of running out of steamnotably with a record release ($563.7 million) on May 1st.

And, while American ETFs have been gaining momentum over the past 2 days with daily net inflows exceeding $250 million, Hong Kong ETFs continue to weaken. Note also that spot Bitcoin ETFs launched in Hong Kong remain inaccessible to Chinese investorswhile some more traditional ETFs are.

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Is this lost for the Hong Kong market?

Although regulation and pressure from the Securities and Exchange Commission (SEC) are significant in the United States, the country has had a foothold in cryptocurrencies for many years and continues to see startups in the sector emerge.

In Hong Kong, an independent territory bordering China, things are completely different. After having toughened our tone more and more noticeably in 2020 and 2021Hong Kong took a completely different turn in 2023. The region stood out in particular by offering to host Coinbase, the largest American exchange owned by the SEC, or even by forcing its banks to accept companies operating in the crypto sector as clients.

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This positive momentum, combined with the fact that Hong Kong is the 4th financial center in the world, could portend a positive future for investment vehicles relating to cryptocurrencies although the latter is quite measured at the moment. Rebecca Sin, analyst at Bloomberg Intelligence, also pointed out that it was very likely that other Bitcoin ETF issuers would soon be approved in Hong Kong, which could breathe new life into this market.

Hashkey Capital, which issues one of the Bitcoin ETFs we are talking about, has just obtained the dual license authorizing it to offer a complete range of crypto products to investors, a first. We must therefore expect other companies to follow suit.

In the same vein, the provider of cryptocurrency payment solutions Alchemy Pay announced a partnership with securities trading services company Victory Securities to provide access to Bitcoin and Ethereum spot ETFs in Hong Kong, an agreement that will serve as a link between traditional finance and cryptocurrencies.

At the same time, Hong Kong has recently shown its desire to promote interoperability between central bank digital currencies (CBNCs) and tokenized assets, an initiative which demonstrates its desire to take the lead in the digital revolution.

However, Hong Kong still remains dependent on China’s tightening of the screws on cryptocurrencies. A relaxation of the latter, which would result, for example, in the possibility for Chinese investors to invest in its ETFs, could change the situation.

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Sources: SoSo Value, Bloomberg

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