Bitcoin & Ethereum ETFs Struggle in Hong Kong 📉

A Lukewarm Debut for Spot Bitcoin And Ethereum ETFs in Hong Kong

Hong Kong’s financial market witnessed a subdued start for its newly launched spot Bitcoin and Ethereum exchange-traded funds (ETFs), which did not meet initial trading volume expectations. Despite substantial initial issuance sizes, market interest appeared restrained, as evidenced by the trading data for the first day.

New ETFs Enter the Market

The ChinaAMC Bitcoin ETF, denominated in HKD (tickers: 3042.HK and 3046.HK) and its USD equivalent, the Harvest BitcoinSpot ETF (tickers: 3439.HK and 3179.HK), alongside the Bosera HashKey BTC ETF in USD (tickers: 3008.HK and 3009.HK), were among the several ETFs that began trading.

The ChinaAMC Bitcoin ETF reported a significant initial issuance size of $121 million (HK$ 950 million), with its Ether equivalent launching at $20 million (HK$ 160 million). However, the trading volumes recorded were modest: the Bitcoin Spot ETFs accumulated only $8.8 million, while Ether Spot ETFs recorded a mere $2.6 million.

Trader T (@pivfund2100) commented that the trading volume comparing to US Spot ETF was trivial, indicating over-preparation on liquidity.
He noted that retail investors were the major participants for the day, emphasizing the limited participation.

Market Observations and Limitations

This observation underscores the discrepancy between the anticipated and actual market participation, suggesting that the issuers may have overestimated initial market demand. The lack of participation from Mainland Chinese investors played a significant role in the dampened trading volumes, with restrictions preventing investors from accessing the ETFs. Despite these geographical limitations, the ETFs represent an essential development for the region, offering a regulated mechanism for large-scale transactions between cryptocurrencies and fiat currencies.

Trader T highlighted the lack of access for Mainland Chinese investors as a significant market limitation.
He emphasized that the ETFs provide a regulated mechanism for large-scale transactions in the region.

Performance Discrepancies with US ETFs

Notably, the performance of Hong Kong’s spot ETFs starkly contrasts with their US counterparts. US-based spot Bitcoin ETFs saw a high volume on their inaugural trading day, while Hong Kong’s ETFs fell short. The broader cryptocurrency market reacted negatively to the lukewarm reception of Hong Kong’s ETFs, with Bitcoin and Ether prices dropping significantly within hours during European trading.

US-based spot Bitcoin ETFs had a high trading volume compared to Hong Kong’s ETFs.
The cryptocurrency market reacted negatively to the underperformance of Hong Kong’s ETFs.

Market Reaction and Price Movements

Bitcoin and Ether experienced significant price drops following the lackluster debut of the ETFs in Hong Kong. The market interpreted the underperformance as a lack of confidence or a smaller-than-expected investor base. Bitcoin dropped nearly 5%, while Ether fell by more than 7.0% within a few hours of trading.