Hong Kong is set to introduce a Bitcoin exchange-traded fund (ETF) that allows investors to take a bearish stance on the cryptocurrency.
CSOP Asset Management Ltd, the first offshore asset manager set up by a regulated company in China, is launching the CSOP Bitcoin Futures Daily (-1x) Inverse Product. It will be the first crypto-linked inverse ETF in the Asia-Pacific region.
CSOP CEO Ding Chen confirmed that the launch will take place on Tuesday, 23 July 2024, in Hong Kong, Bloomberg reported.
Chen also revealed that CSOP is working on launching an inverse Ether ETF.
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Hong Kong’s Spot Bitcoin ETFs Received Lukewarm Response
In April, Bitcoin and Ether ETFs were listed in Hong Kong. However, the ETF products have received a lukewarm response thus far.
However, Chen expressed confidence in the potential success of the inverse Bitcoin ETF, stating that a collection between $50 million and $100 million in assets over a couple of years is “definitely achievable.” He revealed that the management fee for the ETF will be 1.99%.
Asia’s first inverse #Bitcoin ETF to go live tomorrow in Hong Kong. Buying this would mean you are essentially shorting Bitcoin. Whilst at a glance it could be bad, one has to understand that fund managers sometimes need to hedge their bets strategically, so in reality this is… pic.twitter.com/cv2Lw2D48C
— Bitcoiner in Malta (@bitcoinonly1234) July 22, 2024
Globally, inverse crypto exchange-traded products have attracted approximately $106 million in assets to date. The largest of these funds is ProShares Advisors LLC’s Short Bitcoin Strategy ETF, which has accumulated $62.5 million in assets.
The managers of the Bitcoin and Ether ETFs in Hong Kong offer an in-kind subscription and redemption mechanism, allowing investors to exchange underlying crypto assets for ETF units and vice versa. In contrast, US funds operate on a cash redemption model.
Data compiled by Bloomberg shows that the total assets of the six Bitcoin and Ether ETFs in Hong Kong currently stand at $362 million. In comparison, spot-Bitcoin ETFs launched in the US in January 2024 have a combined total of $60.7 billion in assets.
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Bitcoin investors have experienced a rollercoaster ride over the summer. The leading crypto company saw its value sink below $54,000 in early July before rebounding in hopes of a return to power by a pro-crypto figure, Donald Trump.
As of now, Bitcoin is trading at $67,160, largely flat over the past day. The flagship crypto is up by more than 7% over the past week and up by 4% over the past month, according to data from CoinMarketCap.
Hong Kong Sees a Series of Exchange Closures
Hong Kong has been actively pursuing its vision of becoming a prominent crypto hub. The authorities have licensed two crypto exchanges that facilitate limited retail trading.
However, it is worth noting that the region has witnessed a series of crypto exchange closures as of late. On 28 March 2024, HKVAEX, suspected to be affiliated with Binance, withdrew its license application.
Subsequently, IBTCEX, QuanXLab, and Huobi HK followed suit, followed by Gate. HK, OKX HK and Bybit were next in line to withdraw applications.
These withdrawals have left only 15 virtual asset trading platforms remaining on the application list, with a total of 13 companies having withdrawn or returned their license applications.
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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