Bitcoin Spot ETFs Gain Traction in Hong Kong: Insights from Bloomberg Analyst

The recent launch of Bitcoin Spot ETFs in Hong Kong has sparked significant interest, drawing attention from market observers, including renowned Bloomberg Intelligence analyst, Eric Balchunas. Balchunas has offered insights into the historical significance of these products’ introduction in the region.

We just put out note with final data (which doesn’t come in as fast as US). In short, HK saw $292m in assets on Day One (we predicted $1b in two years so way ahead of schedule but corrections can derail trajectories as we seeing in US). Ether ETFs grabbed 15% of pie and size… https://t.co/RT8SvMvEuA

— Eric Balchunas (@EricBalchunas) May 2, 2024

Hong Kong Witnesses Surge in Inflows for Bitcoin Spot ETFs

Eric Balchunas remarked on the emergence of Bitcoin Spot ETFs in Hong Kong, noting their comparatively modest size, just 1/168th of the funds available in the United States. However, he underscored the auspicious timing of their debut amidst a slowdown in the US market, predicting that the substantial inflows observed in Hong Kong would more than offset marginal outflows in the US.

The successful first day of trading saw notable inflows, with Hong Kong’s Bitcoin and Ethereum Spot ETFs raising over HK$11.2 million. This achievement stands in contrast to net outflows experienced in the US market, marking a promising start for these products in Hong Kong.

Balchunas elaborated on the performance, referencing a recent memo from his team detailing the final data on Hong Kong’s spot ETFs, albeit acknowledging its less timely availability compared to the US market. His initial projection of a $1 billion inflow over two years may be surpassed sooner than expected, given the impressive $292 million in assets accumulated on day one. However, he cautioned that deviations from projections, as observed in the US market, could affect plans going forward.

Analysis of the trading activity revealed that Ethereum spot ETFs captured 15% of the market on the first day, with investors showing preference for larger funds despite higher fees. Notably, the ChinaAMC BTC spot ETF (3042 HK) garnered the highest inflow at $124 million, despite its elevated fees, while other funds like the Harvest Bitcoin Spot ETF (3439 HK) and Bosera Hashkey Bitcoin ETF (3008 HK) attracted net inflows of $63 million and $61 million, respectively.

Clarifications Amidst Community Inquiries

Balchunas addressed queries regarding the apparent disparity between the $292 million in assets and the HK$11.2 million in inflows. He explained that the $292 million constituted seed money contributed just before launch and was not factored into the volume calculation. This practice contrasts with the US market, where seed money is retained until the first day to enhance volume perception for marketing purposes.

US Market Witnesses Significant Outflows

In contrast to the positive developments in Hong Kong, the US market experienced substantial outflows, surpassing $500 million in a single day. This rapid selloff marked the largest outflow since the inception of Spot Bitcoin ETF trading earlier in the year. Notably, the Fidelity Wise Origin Bitcoin Fund (FBTC) and the Grayscale Bitcoin Trust ETF (GBTC) were among the funds witnessing significant withdrawals, highlighting investor sentiment in the US market.

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