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The Rise of Virtual Asset ETFs in Hong Kong
A milestone was achieved in the financial markets of Hong Kong as six new spot Bitcoin and Ethereum Exchange-Traded Funds (ETFs) made their debut, marking the region as the first in Asia to allow the trading of spot virtual asset ETFs. According to data from the Hong Kong Exchange, these ETFs saw more than $80 million Hong Kong Dollars (HKD)—equivalent to roughly $10 million USD—worth of shares traded on their first day of trading.
Significant Growth in Investor Interest
The introduction of these new spot ETFs comes in response to the growing investor interest in virtual asset ETFs following the launch of funds based on digital asset futures in late 2022. Experts have predicted that the new spot ETFs could attract as much as $25 billion in market inflows, especially if they are made accessible to mainland Chinese investors.
During the first quarter of 2024, the combined average daily turnover (ADT) for the three existing futures ETFs stood at $51.3 million HKD ($6.5 million), a significant increase from $8.9 million HKD ($1 million) during the same period in 2023, indicating a growing demand for digital asset investment products in the region.
Outperformance of Spot ETFs
Despite their relative novelty, the six new spot funds have already shown promising performance compared to their futures counterparts. The spot Bitcoin and Ethereum ETFs surpassed the trading volumes of their futures counterparts in Hong Kong on their debut. However, they fell short of the remarkable trading volumes witnessed by U.S. spot Bitcoin ETFs when they first entered the market earlier this year.
The U.S. Bitcoin ETFs garnered $4.5 billion in trading volume upon their debut and currently hold over 215,000 BTC—equivalent to approximately $11.9 billion at current prices—to support their outstanding shares.
Issuer Dominance and Trading Performance
Harvest Global Investments, China Asset Management, and Bosera and Hashkey are among the issuers offering spot Bitcoin and Ethereum ETFs in Hong Kong. In their initial trading sessions, the Bitcoin ETFs demonstrated stronger performance compared to their Ethereum counterparts, with Bitcoin ETF shares gaining around 2% while Ethereum ETF shares experienced a slight decline of 0.5% by market close.
ChinaAMC’s Bitcoin ETF emerged as the dominant player on its first trading day, accounting for 57% of the Bitcoin ETF turnover, followed by Harvest with 29% and Bosera Hashkey with the remaining share. Similarly, among the three Ethereum funds, ChinaAMC’s fund led with a 65% share of the turnover, followed by Harvest with 25% and Bosera Hashkey with the remaining portion.
This successful debut of spot Bitcoin and Ethereum ETFs in Hong Kong signals a growing appetite for digital asset investment opportunities in the region, setting the stage for further advancements in the virtual asset market.
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