Hong Kong’s largest bitcoin futures exchange-traded fund (ETF) has experienced a remarkable surge, with its assets under management skyrocketing five-fold to over $100 million in just the last five months. Local investors have been fervently pursuing the rally in the world’s most renowned cryptocurrency.
Although Hong Kong entered the realm of crypto trading relatively late, approving its initial three cryptocurrency futures ETFs in late 2022, the CSOP Bitcoin Futures ETF managed by CSOP Asset Management has witnessed substantial demand growth, particularly in February.
According to Alessandro Zhu, who oversees crypto products and serves as the deputy head of fixed income at CSOP Asset Management, the approval and introduction of spot bitcoin ETFs in the United States this year have fueled investor demand. Many believe that the token’s limited supply will lead to price appreciation. Additionally, Bitcoin’s significant outperformance compared to Hong Kong stocks has further heightened interest.
Despite cryptocurrency trading being prohibited in mainland China, offshore Chinese financial institutions are permitted to invest in bitcoin ETFs in Hong Kong, contributing to the ETF’s popularity.
Bitcoin’s recent surge, with a 45% gain this month alone and trading at approximately $63,000, is nearing its record highs from November 2021, close to $69,000.
The CSOP Ether Futures ETF has also seen a doubling of assets under management this year, while trading volumes have surged. The average daily turnover for the CSOP Bitcoin Futures ETF has risen to $2.8 million this year, compared to $0.97 million last year, now rivaling turnover in some major Hong Kong property companies such as the Wharf (Holdings).
There is anticipation among market participants that Hong Kong will approve its first spot bitcoin ETF this year, as officials aim to position the city as a hub for virtual assets. Kennix Chan, executive director of Victory Securities, notes promising signs, with numerous spot bitcoin ETF applications submitted to the Hong Kong Securities and Futures Commission in recent months.
