Hong Kong Bitcoin ETFs' Inflows Insufficient to Balance US Counterparts' Outflows
Summary:
The recently debuted Hong Kong spot Bitcoin ETFs are experiencing inflows insufficient to offset the outflows from 11 US Bitcoin ETFs. The lackluster trading activity of Hong Kong ETFs, with a $12.4 million trading volume on their first day, falls far short of the US counterpart's $4.6 billion. Despite the fairly minor inflows, the debut of the Hong Kong ETFs could pave the way for similar initiatives in other regions. The current market situation suggests that Bitcoin might retread back to the $50,000 territory.
Recent activity reveals that inflows from the new Hong Kong spot Bitcoin exchange-traded funds (ETFs) are insufficient to counterbalance the sales from the 11 American Bitcoin ETFs. Data from May 2nd shows that despite this week drawing a net inflow of $217 million into the Hong Kong ETFs, per CoinShares' research head James Butterfill's report, it falls short of the $298 million net outflow produced by the 11 U.S. spot Bitcoin ETFs, based on data from Dune.
The present Bitcoin rally, which has seen the cryptocurrency reach new all-time highs, has been fueled in large part by institutional funding from ETFs. According to CryptoQuant, by February 15, around 75% of new investment into Bitcoin—the world's biggest cryptocurrency—as it broke the $50,000 threshold, was accounted for by Bitcoin ETFs.
On May 1, Fidelity’s Wise Origin Bitcoin Fund (FBTC) was accountable for the majority of the outflows, selling more than $191 million worth of Bitcoin. The second-largest daily outflow was seen from Grayscale’s GBTC fund, amounting to $167.4 million worth of BTC, as per the Farside data.
On April 30, the first group of Hong Kong Bitcoin and Ether-based ETFs was introduced, generating anticipation amongst cryptocurrency enthusiasts. Unfortunately, trading activity has fallen short of expectations. During their first day, Hong Kong-based ETFs accumulated only a mere $12.4 million in trading volume, which is significantly less compared to the $4.6 billion trading volume of U.S. spot Bitcoin ETFs on their first day.
Nonetheless, given the Hong Kong market's size, the aforementioned figure is considerable. It equates to $1.6 billion in the U.S. trading volume, as stated in Bloomberg ETF analyst Eric Balchunas’ April 30 report.
Though the inflows were relatively minor, the introduction of the Hong Kong ETFs could lay the groundwork for other regions, says James Wo, founder and CEO of DFG.
After their debut, could Bitcoin ETFs influence the cryptocurrency to retread back to the $50,000 level? Bitcoin fell under the $60,000 psychological threshold on May 1, a day following the launch of the new ETFs, which hasn't happened since February, based on CoinMarketCap.
Bitfinex's head of derivatives, Jag Kooner, points out that losing the $59,000 level, which also serves as the short-term holder realized price (STH-RP) or the average ETF inflow price, might result in Bitcoin descending back towards the $50,000 territory. He stresses that the STH-RP is vital for BTC to maintain, suggesting that, if lost, Bitcoin would likely tumble down to the low $50,000s.
Published At
5/2/2024 12:51:33 PM
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