Key Points
- Hong Kong’s Bitcoin ETFs underperform compared to their U.S. counterparts in their first week of launch.
- Despite being the first of their kind globally, Hong Kong’s Ethereum ETFs also fail to impress.
Hong Kong’s spot Bitcoin exchange-traded funds (ETFs) have not lived up to expectations in their first week of launch.
Compared to their U.S. equivalents, they’ve significantly underperformed.
Performance of Hong Kong’s Bitcoin ETFs
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).
However, the majority of this was subscribed to pre-listing.
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.
Farside Investors noted that the launch of the Bitcoin and Ethereum ETFs in Hong Kong was not as significant as their U.S. counterparts.
Performance of Hong Kong’s Ethereum ETFs
The performance of Hong Kong’s spot Ether ETFs, the world’s first, was also lackluster.
As of May 6, they had a cumulative AUM of $54.2 million and total inflows of $9.3 million.
Despite being viewed as significant improvements to their U.S. equivalents, Hong Kong’s spot crypto ETFs have not attracted significant assets.
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.
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.
Therefore, in relation to their local market, these ETFs are as significant as the U.S. ones.
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.
This sector has also been impacted by slower economic growth in Mainland China since 2022, making it more illiquid.
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.
However, these assets are not currently accessible to Mainland Chinese investors unless they also hold Hong Kong residency.
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.
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.
