Hong Kong Expands Cryptocurrency Product Range with Reverse Bitcoin ETF

On July 23, Hong Kong is set to launch Asia’s first reverse Bitcoin futures product. The CSOP Bitcoin Futures Daily (-1x) Inverse Product (7376.HK), managed by CSOP Asset Management Limited, aims to profit from Bitcoin price declines. This product follows the launch of the CSOP Bitcoin Futures ETF (3066.HK) in December 2022.

CSOP Introduces Reverse Bitcoin ETF in Hong Kong

The new ETF from CSOP mirrors the daily inverse performance of the S&P Bitcoin Futures Index. It employs a futures-based replication method, meaning it invests in CME Bitcoin Futures for the nearest month. This strategy allows investors to benefit from Bitcoin’s downward movement.

The CSOP inverse product will trade on the Hong Kong Stock Exchange (SEHK) at approximately HKD 7.8 per unit. The SEHK began trading spot cryptocurrency ETFs, including the CSOP Bitcoin Futures ETF and Ether Futures ETF, at the end of 2022.

Hong Kong Cryptocurrency ETFs Accumulate $170 Million in Assets

As of April 29, Hong Kong’s cryptocurrency ETFs have attracted HKD 1.3 billion (approximately $170 million) in assets. For instance, Samsung Asset Management’s Hong Kong Bitcoin Futures ETF launched in January 2023. These ETFs are linked to cash-settled contracts listed on the Chicago Mercantile Exchange.

In the first quarter of 2024 alone, these virtual asset futures ETFs saw an average daily trading volume of $51.3 million, with net inflows totaling $529 million. This growth underscores Hong Kong’s increasing interest in cryptocurrency ETFs.

Hong Kong Firms Combat Cryptocurrency Fraud

The Securities and Futures Commission (SFC) of Hong Kong recently identified seven cryptocurrency exchanges engaged in illegal activities.

These exchanges provided services without proper licenses, earning them the label of “suspicious virtual asset trading platforms.”

The SFC is actively creating a legitimate list of cryptocurrency trading entities to combat fraud and scams.

CSOP’s Mr. Chen believes that the reverse Bitcoin ETF could amass $50 million to $100 million in assets within a few years, with a management fee of 1.99%. Some traders anticipate Bitcoin’s price reaching $100,000 soon, prompting the company to implement new risk management measures to address this optimism.

ProShares Leads with $62.5 Million ETF

ProShares Advisors LLC’s Short Bitcoin Strategy ETF boasts the largest assets at $62.5 million, with a management fee of 1.33%. Hong Kong’s inaugural cryptocurrency ETF began trading in April, directly competing with leading Bitcoin products in the United States. This competition highlights Hong Kong’s growing prominence in the global cryptocurrency ETF market.

This trend aligns with the overall push by various countries to enhance their influence in the cryptocurrency space. The launch of the reverse Bitcoin ETF underscores Hong Kong’s commitment to providing diverse investment tools, solidifying its position as a leading cryptocurrency hub in the Asia-Pacific region.

Sentiment: Positive