In a remarkable turn of events, Hong Kong's leading bitcoin futures exchange-traded fund (ETF) has witnessed an extraordinary five-fold increase in assets over the past five months, surging beyond the $100 million mark. This surge can be attributed to local investors eagerly riding the wave of the spectacular rally in the world's most renowned cryptocurrency.
Embracing Crypto: Hong Kong's Evolution in Cryptocurrency Trading
Hong Kong, historically a newcomer to crypto trading, entered the scene by approving its initial three cryptocurrency futures ETFs in the latter part of 2022. This move marked a significant stride in embracing the digital currency landscape.
CSOP Asset Management: Navigating the Surge
CSOP Asset Management, the steward of the CSOP Bitcoin Futures ETF, reported a substantial spike in demand, particularly in the month of February. Alessandro Zhu, overseeing crypto products and serving as the deputy head of fixed income at CSOP Asset Management, attributes this surge to the approval and launch of spot bitcoin ETFs in the U.S. The belief that the token's constrained supply will propel prices higher has sparked heightened interest among investors.
Bitcoin's Soaring Performance and Its Impact on Demand
The notable outperformance of Bitcoin compared to Hong Kong stocks has significantly intensified demand. With a staggering 45% gain in just the current month, Bitcoin is inching closer to its record highs from November 2021, hovering around the $63,000 mark as of Thursday.
Offshore Investments: Navigating Cryptocurrency Trading Restrictions
While cryptocurrency trading remains prohibited in mainland China, offshore Chinese financial institutions find an avenue for investment in bitcoin ETFs in Hong Kong. This dynamic plays a pivotal role in the evolving landscape of digital asset investments.
Ripple Effect: CSOP Ether Futures ETF and Increased Volumes
The positive trend isn't confined to the CSOP Bitcoin Futures ETF alone; assets under management for CSOP Ether Futures ETF have also experienced a twofold increase this year. This surge is accompanied by a remarkable boost in trading volumes, with the average daily turnover for the CSOP Bitcoin Futures ETF reaching $2.8 million this year compared to $0.97 million last year. These figures now rival turnover in some of Hong Kong's prominent property giants, including the Wharf (Holdings).
Future Outlook: Hong Kong as a Hub for Virtual Assets
Anticipating a promising future, market participants are optimistic about Hong Kong approving its first spot bitcoin ETF this year. Officials are keen on positioning the city as a central hub for virtual assets, evident in the growing number of spot bitcoin ETF applications submitted to the Hong Kong Securities and Futures Commission in recent months.
"Hong Kong’s bitcoin ETF is showing promising signs with a large number of (spot bitcoin ETF) applications to Hong Kong Securities and Futures Commission in the past few months," commented Kennix Chan, executive director of Victory Securities. The momentum is unmistakable as Hong Kong emerges as a significant player in the dynamic world of digital asset investments.