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Cryptocurrency News Articles
Hong Kong Bitcoin Spot ETFs Surge Amidst US Market Slowdown
May 03, 2024 at 06:30 pm
Following the successful debut of Bitcoin Spot ETFs in Hong Kong, Bloomberg Intelligence expert Eric Balchunas analyzes their impact. Despite being smaller than US funds, HK Spot ETFs have attracted significant inflows, offsetting the decline in US flows. The first day of trading saw Ethereum spot ETFs garnering 15% of the market, with investors favoring high-fee funds. However, outflows in US BTC spot ETFs have exceeded $500 million, marking the largest withdrawal since their launch, raising concerns about market sentiment.
Hong Kong's Bitcoin Spot ETFs Witness Notable Inflows, Counterbalancing US Market Slowdown
Following the highly anticipated launch of Bitcoin Spot Exchange-Traded Funds (ETFs) in Hong Kong, renowned Bloomberg Intelligence expert Eric Balchunas has provided insightful commentary on the historical debut of these products in the region.
Market Observations
On Tuesday, Balchunas characterized Hong Kong's Spot Bitcoin ETFs as a "market for ants," given their significantly smaller size compared to their US counterparts, amounting to approximately 1/168th of the total fund size in the United States. However, he emphasized that the timing of the launch, coinciding with a slowdown in the US market, has played a pivotal role in attracting inflows that have effectively offset marginal negative flows in the United States.
According to data shared by the Human and Machine channel, Hong Kong's Bitcoin and Ethereum Spot ETFs collectively raised over HK$11.2 million on their first day of operation, countering the net outflows observed in the US market.
Expert Analysis
Responding to the channel's post, Balchunas shared further insights. He disclosed that he and his research team had recently released a memo containing final data pertaining to HK's spot ETFs, albeit less timely than their counterparts in the US.
Balchunas acknowledged his previous projections of the products attracting inflows of approximately $1 billion over a two-year period. However, the impressive $292 million in assets witnessed on day one has led him to believe that his predictions may have been significantly ahead of schedule. He cautioned that potential corrections could still derail plans, as evidenced by recent market volatility in the United States.
Trading Dynamics
During the inaugural day of trading, Ethereum spot ETFs accounted for 15% of the total market share. Interestingly, investors appeared to favor larger funds with higher fees over those offering lower fees. The ChinaAMC BTC spot ETF (3042 HK), despite its higher fee structure, attracted the highest inflow of $124 million on day one.
In contrast, other funds with lower fees, such as the Harvest Bitcoin Spot ETF (3439 HK) and the Bosera Hashkey Bitcoin ETF (3008 HK), recorded net inflows of $63 million and $61 million, respectively, on the first day.
Clarity on Asset Calculations
Balchunas's analysis triggered some confusion among community members, prompting a clarifying question from a pseudonymous user regarding the discrepancy between the $292 million in assets and the HK$11.2 million of inflows.
Balchunas explained that the $292 million in assets, which were contributed as seed money prior to the launch, are excluded from the volume calculation. In comparison, seed money in the US market is held back until the first day of trading, artificially inflating the reported volume to support marketing efforts.
US Market Woes
Balchunas's review of the Hong Kong market came amidst significant outflows in the US market, surpassing $500 million in a single day. Wednesday witnessed the largest single-day selloff of US BTC spot ETFs, with a cumulative net outflow of $563.7 million.
Data from Farside Investors indicates that this marks the most significant outflow since the inception of these funds earlier this year. Of the ten spot Bitcoin ETFs, Fidelity Wise Origin Bitcoin Fund (FBTC) suffered the most severe withdrawals, totaling $191.1 million.
Grayscale Bitcoin Trust ETF (GBTC) experienced outflows of approximately $167.4 million, while Blackrock iShares Bitcoin Trust (IBIT) saw a notable $36.9 million withdrawn, marking its first day of outflows since its launch.
Conclusion
The launch of Bitcoin Spot ETFs in Hong Kong has garnered considerable attention and inflows, with Eric Balchunas providing valuable insights into the market dynamics. While the products appear to be gaining traction in the region, the broader cryptocurrency market continues to grapple with volatility and outflows in the US. It remains to be seen how these contrasting trends will impact the long-term performance and adoption of Bitcoin Spot ETFs in both markets.
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The information provided is not trading advice. kdj.com does not assume any responsibility for any investments made based on the information provided in this article. Cryptocurrencies are highly volatile and it is highly recommended that you invest with caution after thorough research!
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