Key Points
- The Hong Kong Bitcoin ETFs have seen inflows of $217 million, which is less than the outflows from the 11 US Bitcoin ETFs.
- The debut of the Hong Kong ETFs could set a precedent for other jurisdictions, potentially boosting crypto prices in the long term.
The recently launched Bitcoin exchange-traded funds (ETFs) in Hong Kong have not been sufficient to offset the selling from the 11 US Bitcoin ETFs.
James Butterfill, head of research at CoinShares, reported that the Hong Kong ETFs saw net inflows of $217 million this week, which is less than the net outflows of $298 million from the US Bitcoin ETFs.
Institutional Inflows and Bitcoin Rally
Institutional inflows from ETFs played a significant role in the current Bitcoin (BTC) rally to new all-time highs. By mid-February, Bitcoin ETFs accounted for about 75% of new investment in the largest cryptocurrency as it crossed the $50,000 mark.
The majority of the outflows on May 1 were from Fidelity’s Wise Origin Bitcoin Fund (FBTC), which sold over $191 million worth of Bitcoin. The second-largest daily outflows were from Grayscale’s GBTC fund, which sold $167.4 million worth of BTC.
Hong Kong ETFs Debut
The first batch of Hong Kong Bitcoin and Ether-based ETFs started trading on April 30. However, the trading activity was less than expected. On the first day, the Hong Kong-based ETFs only generated $12.4 million in trading volume, which is significantly less than the first-day trading volume of US Bitcoin ETFs, valued at $4.6 billion.
Despite the relatively small inflows, the launch of the Hong Kong ETFs could set a significant precedent for other jurisdictions. James Wo, the founder and CEO of DFG, believes these ETFs open up Asian markets to crypto exposure, which can likely push prices up in the long term.
The debut of the Hong Kong ETFs seemed to be a “sell-the-news” event for Bitcoin holders. Bitcoin fell below the $60,000 psychological mark on May 1, a day after the new ETFs debuted. The last time Bitcoin traded below $60,000 was at the end of February.
Bitcoin lost a strong support line at $59,000, which also acted as the short-term holder realized price (STH-RP), or the average inflow price of the ETFs. Losing the $59,000 mark could lead to Bitcoin revisiting the $50,000 mark, according to Jag Kooner, head of derivatives at Bitfinex.
