Hong Kong’s spot Bitcoin exchange-traded funds (ETFs) have reached a significant milestone, surpassing 2 billion Hong Kong dollars (approximately $256 million) in assets under management (AUM). However, these ETFs have seen a slower start compared to their U.S. counterparts.
Since their launch on April 30, the Hong Kong ETFs attracted $262 million in inflows during their first week, but the majority of these funds were committed before the official listings. The actual inflows during the initial week were just $14 million, significantly lower than the billions that flowed into U.S. spot Bitcoin ETFs when they debuted in January.
Over the past week, three spot Bitcoin ETFs in Hong Kong saw a net inflow of around 247 BTC, bringing their total holdings to approximately 4,450 BTC. The current AUM for these ETFs stands at about HK$2.1 billion ($269 million).
The ETFs managed by China Asset Management and Harvest Asset Management, in partnership with digital asset trading platform OSL, account for more than HK$1.3 billion ($167 million) of the total. The third ETF, which operates independently of OSL, holds HK$776 million ($99.5 million), representing about 42% of the market.
The slow uptake of Bitcoin ETFs in Hong Kong is partly due to a more limited range of options for investors compared to the 11 offerings available in the U.S. Despite the potential for growth, many investors in Hong Kong seem hesitant to jump into the cryptocurrency market, preferring to wait and see. This reflects the challenges Hong Kong faces in establishing itself as a global hub for cryptocurrency investments.
Industry experts suggest that Hong Kong’s unique approach to spot Bitcoin ETFs, including its redemption method, could attract more investors over time. Unlike American spot crypto ETFs that are limited to cash creations, Hong Kong’s ETFs allow for in-kind creations, where actual cryptocurrencies are used to create new ETF shares. This could boost investor confidence and participation.