Ethereum

Bitcoin

Impact

<h2 id="key-points">Key Points</h2>
<ul>
 <li>Hong Kong’s Bitcoin ETFs underperform compared to their U.S. counterparts in their first week of launch.</li>
 <li>Despite being the first of their kind globally, Hong Kong’s Ethereum ETFs also fail to impress.</li>
</ul>
<p>Hong Kong’s spot Bitcoin exchange-traded funds (ETFs) have not lived up to expectations in their first week of launch.<br> Compared to their U.S. equivalents, they’ve significantly underperformed.</p>
<h2 id="performance-of-hong-kong-s-bitcoin-etfs">Performance of Hong Kong’s Bitcoin ETFs</h2>
<p>Data collated by Farside Investors reveals that the three Bitcoin ETFs that launched on April 30 in Hong Kong have managed to attract a total of $262 million in assets under management (AUM).<br> However, the majority of this was subscribed to pre-listing.</p>
<p>In contrast, the asset inflows were less than $14 million in the first week of launch, a stark difference from the billions that flowed into U.S. Bitcoin ETFs in January.<br> Farside Investors noted that the launch of the Bitcoin and Ethereum ETFs in Hong Kong was not as significant as their U.S. counterparts.</p>
<h2 id="performance-of-hong-kong-s-ethereum-etfs">Performance of Hong Kong’s Ethereum ETFs</h2>
<p>The performance of Hong Kong’s spot Ether ETFs, the world’s first, was also lackluster.<br> As of May 6, they had a cumulative AUM of $54.2 million and total inflows of $9.3 million.</p>
<p>Despite being viewed as significant improvements to their U.S. equivalents, Hong Kong’s spot crypto ETFs have not attracted significant assets.<br> These ETFs are denominated in three fiat currencies and feature in-kind transfers, allowing investors to buy and redeem ETF units directly via Bitcoin or Ether.</p>
<p>Senior Bloomberg ETF analyst Eric Balchunas noted that while the numbers may not be impressive compared to the U.S., the Hong Kong ETFs’ $310 million is equivalent to $50 billion in the U.S. market.<br> Therefore, in relation to their local market, these ETFs are as significant as the U.S. ones.</p>
<p>The Hong Kong equities sector, however, is relatively small, with a total market cap of $4.5 trillion, compared to $50 trillion worth of listed equities across all U.S. exchanges.<br> This sector has also been impacted by slower economic growth in Mainland China since 2022, making it more illiquid.</p>
<p>A study by crypto exchange OSL found that nearly 80% of crypto-savvy investors in Hong Kong plan to invest in the new Bitcoin and Ether ETFs.<br> However, these assets are not currently accessible to Mainland Chinese investors unless they also hold Hong Kong residency.</p>
<p>SoSoValue researchers noted that the management fees of Hong Kong’s crypto ETFs range from 0.85% to 1.99% annually, significantly higher than the 0.25% average annual management fees charged by U.S. issuers.<br> As a result, for institutional investors who are optimistic about the crypto market and intend to hold for a long time, the holding cost of the U.S. Bitcoin ETF is lower.</p>

Hong Kong’s Bitcoin and Ether ETFs Struggle to Make Market Impact

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