Hong Kong Bitcoin and Ether ETFs See Record Net Outflows Since Launch

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As a researcher with extensive experience in the cryptocurrency market, I find the recent outflows from Hong Kong’s Bitcoin and Ethereum ETFs alarming. The net losses reported on May 13 wiped out all gains made since their launch and marked a significant shift in investor sentiment towards these investment products.

On Monday, May 13, Hong Kong’s Bitcoin and Ethereum ETFs saw their biggest single-day withdrawal of assets. This outflow erased all profits these funds had gained since their debut just over a week prior.

Major Outflows Hit Hong Kong Crypto ETFs

As an analyst, I’ve examined the recent reporting from Hong Kong-based Bitcoin ETF funds managed by Bosera, ChinaAMC, and Harvest Global. Notably, these funds experienced a net outflow of approximately $32.7 million. Among them, ChinaAMC’s Bitcoin fund suffered the most significant loss, with a withdrawal of around $15.5 million. This substantial investor sentiment shift has resulted in a noticeable decline in the performance of these funds.

Since May 9th, Hong Kong’s crypto ETFs have seen a consistent withdrawal of funds, amounting to a total of $52.5 million. This pattern underscores waning investor confidence in these financial products. The outflows on Monday reached $20.9 million, exceeding the $18.4 million inflows recorded on May 10th. This behavior implies that investors are withdrawing their funds due to market instability.

In recent times, investors pulled out a total of 6.6 million dollars from Ethereum Exchange-Traded Funds (ETFs) issued by Harvest Global and ChinaAMC. Specifically, these two issuers experienced withdrawals amounting to three million dollars each from their respective Ethereum funds. This pattern of reduced investments in Ethereum ETFs follows a similar trend observed in Bitcoin ETFs, suggesting a significant change in the investment behavior towards cryptocurrency ETFs based in Hong Kong.

The losses incurred by Ether ETFs are noteworthy considering their modest market size compared to Bitcoin ETFs. Harvest Global’s Bitcoin ETF saw its first outflow, with a sum of $9.8 million being withdrawn. This is a notable shift from the inflows and profits witnessed during the early trading days post-launch on April 30th.

Post-Halving Slump Affects Hong Kong ETFs

Over the weekend, Bitcoin’s outflows aligned with the cryptocurrency trading below $61,000. This price drop can be linked back to the post-halving event that occurred on April 20th. During this time, the Bitcoin mining rewards were reduced by half. As a result, this built-in mechanism in Bitcoin’s blockchain often triggers a decrease in price as the market adapts to the adjusted rate of new issuances.

Investor responses to Bitcoin’s price drop have been swift and cautious, leading them to withdraw funds from Bitcoin ETFs in fear of further decreases. Historically, Bitcoin’s price has been influenced by the halving event, resulting in temporary declines followed by potential long-term gains. However, the initial reaction to this latest dip has been predominantly negative, causing substantial outflows of capital from these ETFs.

The crypto ETF market in Hong Kong is much less developed than that of the United States. In the US, over $50 billion is managed by 11 Bitcoin spot ETFs collectively. On the other hand, ETFs based in Hong Kong have a combined asset value of only $179.2 million. Of this amount, Bitcoin ETFs account for 88.5%, with the remaining 11.5% allocated to Ether ETFs.

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2024-05-14 05:09