May 2, 2024
Bitcoin ETF

Hong Kong Bitcoin ETFs Struggle Against US Counterparts

Despite the excitement surrounding the launch of Hong Kong spot Bitcoin exchange-traded funds (ETFs), they face a formidable challenge against their US counterparts.

The inflows from Hong Kong ETFs are struggling to match the selling pressure generated by 11 United States Bitcoin ETFs.

Inflows vs. Outflows: A Tale of Two Markets

According to James Butterfill, the head of research at CoinShares, Hong Kong ETFs witnessed $217 million worth of net inflows this week. However, this pales in comparison to the $298 million worth of net outflows from the 11 US spot Bitcoin ETFs reported by Dune.

Significance of Institutional Inflows

Institutional inflows from ETFs have been a driving force behind Bitcoin’s recent rally to new all-time highs.

According to CryptoQuant research, these ETFs accounted for about 75% of new investment in Bitcoin by mid-February. Bitcoin soared past the $50,000 mark during this period.

Fidelity’s Wise Origin Bitcoin Fund (FBTC) and Grayscale’s GBTC fund have been notable players in the market. On May 1, FBTC saw outflows of over $191 million, while GBTC sold $167.4 million worth of BTC, as per Farside data.

Hong Kong ETF Debut: Setting Precedents

The launch of the first batch of Hong Kong Bitcoin and Ether-based ETFs on April 30 was met with anticipation. Despite a disappointing trading activity with only $12.4 million in trading volume on the first day, analysts like Eric Balchunas hold an optimistic view. He suggests that this is significant progress especially when considering the size of the Hong Kong market.

While the inflows may seem modest, the debut of Hong Kong ETFs could pave the way for other jurisdictions, according to James Wo, the founder and CEO of DFG. He believes that these ETFs could potentially push prices up in the long term. As more countries will follow Hong Kong’s lead in opening up to crypto exposure.

Image by Vectorarte on Freepik

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