Hong Kong Bitcoin and Ether ETFs See Record Net Outflows Since Launch

Hong Kong’s Bitcoin (BTC) and Ethereum (ETH) exchange-traded funds (ETFs) experienced their largest-ever net outflow on Monday, May 13. This event wiped out all gains made since its launch less than two weeks ago.

Major Outflows Hit Hong Kong Crypto ETFs

Hong Kong’s spot Bitcoin ETF funds, managed by Bosera, ChinaAMC, and Harvest Global, reported a net outflow of $32.7 million. ChinaAMC’s Bitcoin fund suffered the largest loss, with $15.5 million in outflows, according to Farside Investors data. This substantial withdrawal marks a notable shift in investor sentiment, leading to a significant decline in the funds’ performance.

The outflows were not limited to a single day. Since May 9, Hong Kong’s crypto ETFs have consistently posted net outflows totaling $52.5 million. This trend highlights a growing lack of confidence in these investment products. Monday’s outflows alone accounted for $20.9 million, surpassing the total inflows of $18.4 million recorded by May 10. This pattern suggests that investors are pulling their funds in response to market volatility.

Spot Ether ETFs from the same issuers faced total net outflows of $6.6 million. Harvest Global and ChinaAMC each saw $3 million withdrawn from their Ether funds. This decline in Ether ETF investments mirrors the trend observed in Bitcoin ETFs, indicating a broader shift in investor behavior towards cryptocurrency ETFs in Hong Kong.

The Ether ETFs’ losses are significant given their relatively small market compared to Bitcoin ETFs. The recent outflows mark the first instance of Harvest Global’s Bitcoin ETF experiencing withdrawals, with a total of $9.8 million pulled from the fund. This is a stark contrast to the inflows and gains observed during the initial trading days following their launch on April 30.

Post-Halving Slump Affects Hong Kong ETFs

The outflows coincide with Bitcoin trading below $61,000 over the weekend. This drop is attributed to the post-halving slump, where Bitcoin mining rewards were cut by 50% on April 20. This scarcity mechanism, embedded in Bitcoin’s blockchain, typically leads to a price decline as the market adjusts to the new issuance schedule.

Investors’ reaction to the price dip has been swift, pulling funds from Bitcoin ETFs in anticipation of further declines. The halving event has historically impacted Bitcoin’s price, causing temporary drops before potential long-term gains. However, the immediate response has been negative, with significant capital outflows from the ETFs.

Hong Kong’s crypto ETF market remains significantly smaller than that of the United States. In the U.S., 11 spot Bitcoin ETFs collectively manage over $50 billion in assets. In contrast, Hong Kong’s ETFs manage a total of $179.2 million in assets, with Bitcoin ETFs holding an 88.5% share and the remainder allocated to Ether ETFs.

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