Reviewing the performance of Hong Kong crypto ETFs during the first week since their launch. Why did two local asset managers buy the US version of the ETF?

On April 30, the much-anticipated Hong Kong spot cryptocurrency ETF was officially launched on the Hong Kong Stock Exchange. This was also the first time that the Ethereum spot ETF was launched on a large exchange. Currently, Hong Kong spot cryptocurrency ETFs are mainly issued simultaneously by China Asset Management (Hong Kong), Boshi Fund (International) and Harvest International, including Boshi HashKey Bitcoin ETF (03008), Boshi HashKey Ethereum ETF (03009), and China AMC Bitcoin ETF. (03042), ChinaAMC Ethereum ETF (03046), Harvest Bitcoin Spot ETF (03439) and Harvest Ethereum Spot ETF (03179).

From April 30 to May 6, the Hong Kong Spot Cryptocurrency ETF has been online for just one week. How is its specific performance? How is the Hong Kong spot cryptocurrency ETF different from the U.S. spot Bitcoin ETF launched earlier this year? Does it have unique competitiveness to attract the influx of capital from Asia-Pacific and even the world?

To this end, Odaily Planet Daily will review the one-week development of Hong Kong spot cryptocurrency ETFs and make a comprehensive comparison with the U.S. spot Bitcoin ETF.

Although the performance on the first day was not satisfactory, there is hope for the future

In nominal terms, a week has passed for the Hong Kong ETF, but from the actual opening trading day, excluding the May Day holiday and On weekends, Hong Kong ETFs have a total of 4 open trading days. During these four days, the Hong Kong Spot Cryptocurrency ETF raised approximately HK$2 billion on its first day, with a calculated net asset value of US$293 million, compared with the US Spot Bitcoin ETF’s first day net assets of US$113 million. To put it bluntly, it can be said to have an advantage.

But as the first day of trading ended, according to SoSoValue data, the total trading volume of the six first batch of crypto asset spot ETFs issued in Hong Kong was approximately HK$87.58 million (approximately US$12.7 million), which was far lower than that of the first batch of crypto-asset spot ETFs in the United States. The daily spot Bitcoin ETF trading volume was US$4.66 billion.

When the Hong Kong Spot Cryptocurrency ETF has more than twice the amount of funds raised than the US Spot Bitcoin ETF, why is there such a big gap in actual trading volume on the first day?

1. There is a big gap between the market sizes of the two. Compared with the global financial center of the United States, Hong Kong has a relatively smaller scope. In particular, it is not open to ordinary mainland investors for the time being, resulting in a smaller actual transaction volume. Low.

2. The acceptance of cryptocurrency is low. Traditional financial practitioners (and institutions) in Hong Kong and even Asia still have a certain gap in their understanding of cryptocurrency compared with Europe and the United States.

3. The scale of Hong Kong’s fundraising is so high, thanks to its original “physical redemption” mechanism, which enabled many ETF investors to purchase in the form of Bitcoin and Ethereum during the new subscription period ETFs, which in turn results in higher capital raised.

In the next three trading days, the performance of Hong Kong spot Bitcoin ETF and Ethereum ETF was relatively ordinary, as shown in the figure below.

As can be seen from the figure, the trading volume and capital inflow of the six ETFs in Hong Kong were relatively stable and positive in the first three days, but on May 6 , the Bitcoin spot ETF experienced its first net outflow (75.36 BTC), worth approximately US$4.75 million.

Although the Hong Kong spot cryptocurrency ETF did not meet expectations in terms of size and turnover, many celebrities are still optimistic about the future of Hong Kong ETF.

Bloomberg ETF senior analyst Eric Balchunas had previously predicted that it would take two years for the Hong Kong virtual asset ETF market to reach US$1 billion, but it hit US$292 million on the first day, which means that it needs to readjust its view on Hong Kong. A view on the virtual asset ETF market. At the same time, he also said that although the trading volume is not as good as that of the United States, in terms of proportion, the US$310 million Hong Kong ETF is equivalent to US$50 billion in the US market. As a result, Hong Kong virtual asset ETFs already have as big an impact on their local markets as U.S. spot Bitcoin ETFs.

Weng Xiaoqi, chief operating officer of HashKey Group and CEO of HashKey Exchange, said that the scale of assets under custody of HashKey Exchange has increased from 2.2 billion yuan before the release of the ETF to 3.3 billion yuan. He believes that a large amount of funds will continue to flow into the market in the future. . At the same time, Weng Xiaoqi believes that ETFs can attract more traditional investors to enter the virtual asset market. In one year, the overall size can reach 20% of the US market, or about 10 billion US dollars. He believes that the virtual asset market is still a long way from saturation.

Sui Chung, CEO of CF Benchmarks, a subsidiary of crypto exchange Kraken, expects Hong Kong Bitcoin ETF assets under management to reach US$1 billion by the end of 2024.

In addition to celebrities expressing positive views on the future of Hong Kong spot crypto asset ETFs, Tiger Brokers (Hong Kong) also officially launched virtual asset trading services, becoming the first technology brokerage in Hong Kong to support one platform for trading and management of traditional securities. and virtual assets. However, Tiger virtual asset trading services are currently only provided to professional investors. In the future, Tiger Brokers plans to extend virtual asset trading services to retail investors, subject to compliance with regulatory requirements. In addition, the company will also consider adding virtual asset spot deposit and withdrawal services.

US Spot Bitcoin ETF "VS" Hong Kong Spot Crypto Asset ETF

Not long after the Hong Kong spot crypto ETF was officially launched, on May 3, according to Watcher.guru, two Hong Kong asset management companies have Purchased up to $112 million in U.S. spot Bitcoin ETFs. Data shows that in addition to Yong Rong Asset Management’s purchase of the BlackRock IBIT ETF worth $38 million, another Ovata Capital Management purchased four U.S. spot Bitcoin ETFs, with a total investment of amounted to over US$74 million.

Why did the two companies Yong Rong and Ovata choose to buy the US spot Bitcoin ETF?

According to the original text disclosed by Watcher.guru, the relevant data comes from the Hong Kong spot crypto ETF Before the official issuance, the two companies did not adjust their timing based on the progress of Hong Kong ETF.

Assuming that from the perspective of these two asset management companies, most asset management companies are optimistic about their future development prospects when purchasing assets. There is a high probability that they will hold them for a long time. For long-term holdings, they must consider related expenses. . However, judging from the basic information disclosed by the three Hong Kong issuers, ChinaAMC 1.99%, Harvest 1.00% and Boshi 0.85% are higher than the general 0.25% fee rate of the US spot Bitcoin ETF. Although the three issuers are currently incentivizing investment transactions , fee reduction or exemption, but from a long-term perspective, high fee setting will definitely be a "stumbling block" for many long-term investors.

Secondly, from the perspective of market size and trading volume, the current Hong Kong spot crypto ETF has just been launched, and the market size is smaller compared to the US spot Bitcoin ETF that has been developed for nearly 4 months.Larger markets tend to bring better liquidity and trading experience.

Finally, from the perspective of the fund custodian, the custodian of the US spot Bitcoin ETF is Coinbase, while the custodian of the Hong Kong ETF is HashKey Capital and OSL Asset Management Company. From the custody scale and past In terms of trust basis, Coinbase is obviously better.

Doesn’t Hong Kong spot ETF have any advantages? Not necessarily. The current significant differences between the two lie in three points:

· Hong Kong's first "physical subscription mechanism": Compared with the US spot Bitcoin ETF, it can only use cash transactions and physical subscriptions The mechanism can provide investors with more flexible trading methods and increase their enthusiasm for trading. Moreover, the physical subscription mechanism has a great promotion effect on Web 3. The physical subscription mechanism can serve as a capital exit channel for Web 3 investors, opening up the links between traditional finance and Web3, which is beneficial to the later capital turnover rate.

· Regional coverage: After all, there is a certain time difference and policy barriers between the trading hours of the US spot Bitcoin ETF and Asian countries, which is not conducive to Asian companies to carry out corresponding work, but the Hong Kong spot crypto ETF The launch of the ETF will prompt relevant Asian companies to purchase Hong Kong spot ETFs under better physical conditions.

· The first Ethereum spot ETF: The most special advantage is that Hong Kong is ahead of the United States in launching the Ethereum spot ETF. Assuming that the U.S. SEC does not approve the application for the spot Ethereum ETF this month , then at least this year, Hong Kong is the only region that supports spot Ethereum ETFs, which will help attract the intervention of Ethereum-related investors and seize the opportunity.

The channel has been opened, looking forward to potential expectations

In fact, on the day when the Hong Kong spot crypto ETF was launched, the market fell due to the failure to meet expectations and the outflow of the US Bitcoin spot ETF, and the community's view of it was negative. praise. However, after a few days of development, the Hong Kong spot crypto ETF still has a certain stimulating effect on the crypto market.

From the first physical subscription mechanism mentioned above to open up the capital channel between traditional finance and Web3, to the transaction scope that radiates across Asia, it all reflects Hong Kong’s support for the development of Web3. Secondly, compared with Western countries, Hong Kong Even Asia's acceptance of cryptocurrency will take some time to settle. Finally, the Hong Kong spot crypto ETF leaves behind the potential expectation of opening up mainland trading channels.

As Kaiko recently released a report, competition for cryptocurrency spot ETFs is heating up globally. In fact, Hong Kong is essentially uncompetitive on the product side compared to the United States, and ETFs are not meant to create a confrontational situation. The most important thing is that the issuance of ETFs can strengthen the existing liquidity of Web3 funds and flow traditional funds to Web3. On the contrary , when the market is down, ETFs also provide a high-quality channel for Web3 funds to "escape".

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