Hong Kong’s first-ever cryptocurrency exchange-traded funds (ETFs), launched with much fanfare earlier this year, have struggled to attract investors and deliver positive returns. These ETFs, designed to track the performance of leading cryptocurrencies like Bitcoin and Ethereum, have all recorded negative returns since their inception.
The biggest fund tracking Bitcoin’s spot price, ChinaAMC Bitcoin ETF, experienced a 6.69% decline by the end of August, while Bosera HashKey Bitcoin ETF slipped by 4.65% since its launch. Ethereum-based products fared even worse, with ChinaAMC Ether ETF and Bosera HashKey Ether ETF recording losses exceeding 20% as of August’s end.
This underwhelming performance can be largely attributed to the persistent volatility in the cryptocurrency market and the lack of clarity surrounding US policy on digital assets. Bitcoin, after reaching an all-time high of $73,700 in March, has plummeted by over 25% since then.
The US election season has been identified as a significant factor contributing to the turbulence. A report by DBS Group Holdings, Southeast Asia’s largest bank by assets, suggests that cryptocurrency markets are highly sensitive to US election outcomes, seeking cues for greater acceptance of digital assets. The report indicated that Bitcoin could experience further price gains if Republicans are perceived as having a stronger chance of electoral success.
Hong Kong stands out as the only Asian region offering investors exposure to cryptocurrency price movements through ETFs. In contrast, Japan and Singapore have adopted a more cautious approach towards approving such investment vehicles.
The disappointing performance of these Asian-based ETFs comes against a backdrop of sharp outflows from their US-based counterparts. According to SoSo Value, the 12 Wall Street-listed Bitcoin funds experienced over $706 million in outflows last week, marking the second-largest weekly outflows since their launch in early January. Fidelity Wise Origin Bitcoin Fund FBTC led the exodus on September 6th, losing a substantial $85.52 million in Bitcoin.
As of this writing, Bitcoin was trading at $54,632.87, up 0.57% in the past 24 hours, while Ethereum was at $2,286.01, up 0.15%. The future of these ETFs and the broader cryptocurrency market remains uncertain, heavily influenced by regulatory developments and investor sentiment.
