As a researcher with a background in cryptocurrencies and financial markets, I find the current situation surrounding the Hong Kong Bitcoin exchange-traded funds (ETFs) intriguing. Based on the data available, it appears that the inflows into Hong Kong ETFs have not been sufficient to cover the selling from U.S. Bitcoin ETFs this week.
The current inflows into Hong Kong’s newly launched Bitcoin ETFs fall short of offsetting the selling pressure brought about by the 11 US Bitcoin ETFs.
As a crypto investor, I’ve noticed that Hong Kong-based Exchange Traded Funds (ETFs) have attracted a significant amount of investment this week. According to a recent update from James Butterfill, the head of research at CoinShares, these ETFs experienced net inflows totaling $217 million.
This week, the total inflows into the 11 U.S. spot Bitcoin ETFs were lower than the $298 million in net withdrawals reported by Dune. In simpler terms, more money was taken out of these ETFs than went in during the given period.
Bitcoin ETF inflows played a major role in driving Bitcoin’s recent record-breaking price surge past $50,000. As of February 15th, these Bitcoin ETFs represented approximately 75% of the total new investment flowing into Bitcoin based on CryptoQuant’s analysis.
As an analyst, I’ve examined the recent Bitcoin fund flows and noticed that Fidelity’s Wise Origin Bitcoin Fund (FBTC) was responsible for the largest outflows on May 1st, with transactions totaling over $191 million in Bitcoin sales. Following this significant exit, Grayscale’s GBTC fund came in second place with approximately $167.4 million worth of BTC sold on the same day.
As a crypto investor, I’ve been eagerly anticipating the launch of the first Hong Kong-listed Bitcoin and Ethereum-based ETFs back in late April. The prospect of being able to buy into these funds through a regulated exchange was truly exhilarating. Yet, despite the initial buzz surrounding their debut, trading volumes have been underwhelming.
During the initial trading day, Hong Kong-based Bitcoin ETFs generated a relatively modest trading volume of $12.4 million. In contrast, their U.S. counterparts boasted an impressive first-day trading volume of approximately $4.6 billion.
Despite its relatively small market size, Hong Kong saw significant trading volume amounting to approximately $1.6 billion in US terms, as per Eric Balchunas, a senior ETF analyst at Bloomberg, in his April 30 X-post.
“You have to understand [that Hong Kong] is 1/168th the size of the U.S…
During the initial stages, when inflows were limited, the introduction of Hong Kong ETFs could pave the way for similar offerings in other regions, as per James Wo, the founder and CEO of DFG. He shared this perspective with CryptoMoon.
“These ETFs open up Asian markets to crypto exposure, which can likely push prices up in the long term as more countries likely follow the footsteps of Hong Kong as well.”
Could Bitcoin revisit the $50,000 mark after the Hong Kong ETF debut?
The introduction of the initial Bitcoin Exchange-Traded Funds (ETFs) in Hong Kong led to a “sell-the-news” reaction among Bitcoin investors. Consequently, the cryptocurrency dipped below the $60,000 threshold on May 1 – just a day after the ETF launch.
The last time Bitcoin traded below $60,000 was at the end of February, according to CoinMarketCap.
Bitcoin experienced a significant loss at the $59,000 mark, which served both as a robust support level and the average purchase price for short-term investors, also known as the Short-Term Holder Realized Price (STH-RP) or ETFs’ inflow benchmark.
If Bitcoin falls below the $59,000 level, as suggested by Jag Kooner, the head of derivatives at Bitfinex, it may result in Bitcoin revisiting the $50,000 mark based on his assessment shared with CryptoMoon.
“While price predictions are not appropriate based on these, the STH-RP is a crucial support level for BTC to hold and on losing it, or the average ETF buyer cost basis, there is a high likelihood that there is a cascade down to low $50,000s.”
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2024-05-02 13:10