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Hong Kong Bitcoin and Ether ETFs Experience Highest Net Outflows Since Launch

Hong Kong Bitcoin and Ether ETFs hit record net outflows, reflecting investor concerns.

Tue, 14 May 2024, 10:16 am UTC

Hong Kong's Bitcoin and Ether ETFs have experienced record net outflows since launch, marking a significant downturn in investor sentiment and fund performance.

Hong Kong's Bitcoin and Ether ETFs Face Unprecedented $52.5M Net Outflows, Signaling Investor Retreat

On May 13, According to CoinGape, Hong Kong's Bitcoin (BTC) and Ethereum (ETH) exchange-traded funds (ETFs) experienced a sudden reversal of all advances achieved since their inception less than two weeks ago, witnessing their highest net outflow to date.

The spot Bitcoin ETF funds in Hong Kong, managed by Bosera, ChinaAMC, and Harvest Global, reported a significant $32.7 million net outflow. ChinaAMC's Bitcoin fund had the highest loss, with outflows totaling $15.5 million. This dramatic shift in investor attitude has resulted in a considerable drop in the funds' performance.

The outflows were not limited to one day. Since May 9, Hong Kong's crypto ETFs have constantly seen net outflows of $52.5 million. This pattern indicates a rising lack of faith in these financial products. Monday's withdrawals alone totaled $20.9 million, outpacing the entire inflows of $18.4 million reported on May 10. This pattern indicates that investors are withdrawing funds in response to market instability.

Spot Ether ETFs from the same issuers experienced a net outflow of $6.6 million. Harvest Global and ChinaAMC had $3 million removed from their Ether funds. This fall in Ether ETF investments is consistent with the trend observed in Bitcoin ETFs, showing a broader shift in Hong Kong investor behavior toward cryptocurrency ETFs.

Given their smaller market size than Bitcoin ETFs, Ether ETFs have suffered considerable losses. The latest outflows are the first time Harvest Global's Bitcoin ETF has seen withdrawals, with $9.8 million removed from the fund. This contrasts sharply with the inflows and gains seen in the first few trading days following their April 30 introduction.

Bitcoin's Post-Halving Slump Triggers Record Outflows in Hong Kong Crypto ETFs, Reflecting Investor Concerns

The outflows correspond with Bitcoin falling below $61,000 over the weekend. This dip is due to the post-halving slump, in which Bitcoin mining payouts were reduced by 50% on April 20. This scarcity mechanism, built into Bitcoin's blockchain, often results in a price drop as the market adjusts to the new issue timetable.

Investors reacted quickly to the price drop, withdrawing cash from Bitcoin ETFs in expectation of future losses. The halving event has traditionally influenced Bitcoin's price, creating short reductions before potential long-term gains. However, the initial response has been negative, with massive capital withdrawals from ETFs.

Hong Kong's cryptocurrency ETF market is still substantially smaller than the United States. In the United States, 11 Bitcoin ETFs manage more than $50 billion in assets. In comparison, Hong Kong's ETFs handle a total of $179.2 million in assets, with Bitcoin ETFs accounting for 88.5% and Ether ETFs accounting for the remaining portion.

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