The highly anticipated launch of spot Bitcoin and Ether exchange-traded funds (ETFs) in Hong Kong fell short of expectations on their first day of trading, as the six new crypto ETFs managed by China Asset Management, Harvest Global, Bosera, and HashKey recorded a combined trading volume of just 87.58 million Hong Kong dollars ($12 million). This figure pales in comparison to the impressive $4.6 billion in first-day trading volume generated by U.S. spot Bitcoin ETFs.
Data from the Hong Kong Stock Exchange (HKEX) revealed the relatively flat performance and interest in the newly launched ETFs. The Bosera HashKey Bitcoin ETF saw a modest 249,000 HK$ in first-day trading volume, while its Ether counterpart produced an even lower 99,000 HK$ by the closing bell. China Asset Management's (CAM) Bitcoin ETF fared slightly better, attracting 4.6 million HK$ in trading volume, with its Ether ETF recording a similar figure.
The lackluster debut of Hong Kong's spot crypto ETFs comes despite the hype surrounding their launch and the previous success of the city's cryptocurrency futures ETFs, which were introduced in late 2022. HKEX had highlighted investor interest in these "VA Futures ETFs," which attracted $529 million in net inflows during the first quarter of 2024.
In an attempt to boost investor interest, local fund managers and brokerages are offering fee exemptions for the new crypto ETFs. Harvest has waived its management fee for six months, while Borsera has forgone its fee for four months, according to a report by the South China Morning Post.
The publication also suggested that investors in mainland China could potentially access these newly launched products, although this may be mitigated by KYC policies related to mainland Chinese identity cards. Prior to the launch, Wu Blockchain had reported that CAM's subscription size for its spot Bitcoin and Ethereum ETFs attracted $140 million during the initial offering period.
The disappointing first-day performance of Hong Kong's spot crypto ETFs had a ripple effect on the broader cryptocurrency market, with Bitcoin (BTC) facing selling pressure during European trading hours. The leading cryptocurrency by market value fell nearly 2% from $63,300 to under $61,000 in just 60 minutes, while Ether (ETH) slipped 2.8% to $3,066.
The combined trading volume of Hong Kong's crypto ETFs, at just $11 million, was significantly lower than the anticipated $100 million and a far cry from the $655 million generated by U.S.-based spot BTC ETFs on their first day of trading. Since their launch on January 11, U.S. spot BTC ETFs have attracted nearly $12 billion in investor funds, although inflows have recently slowed, stalling Bitcoin's uptrend.
As spot ETFs allow investors to gain exposure to cryptocurrencies without directly owning them, they are considered a more attractive option than futures-based ETFs, which are subject to rollover costs. However, the underwhelming debut of Hong Kong's spot crypto ETFs raises questions about the appetite for such products in the region and their potential impact on the global cryptocurrency market.
