Hon Kong’s largest Bitcoin ETF surpasses $100 million in AUM

Bitcoins in ETF: The largest bitcoin futures exchange-traded fund (ETF) in Hong Kong has experienced a major surge in assets under management, reaching just over $100 million, marking a five-fold increase over the past five months. Local investors have been drawn to the rally in the world's most prominent cryptocurrency.

While Hong Kong entered the crypto trading arena relatively late, approving its first three cryptocurrency futures ETFs in late 2022, CSOP Asset Management, the manager of the CSOP Bitcoin Futures ETF has witnessed substantial demand growth, particularly in February.

Alessandro Zhu, overseeing crypto products and serving as deputy head of fixed income at CSOP Asset Management, attributed the increased demand to the approval and launch of spot bitcoin ETFs in the U.S. this year. Investors are betting on the token's limited supply to drive prices higher. Additionally, Bitcoin's significant outperformance compared to Hong Kong stocks (.HSI) has further fueled investor interest.

Despite cryptocurrency trading being prohibited in mainland China, offshore Chinese financial institutions can invest in bitcoin ETFs in Hong Kong. Bitcoin's recent surge, gaining 45 per cent this month and nearing its November 2021 record high of around $69,000, has also contributed to the increased demand.

The assets under management for CSOP Ether Futures ETF have also seen substantial growth, doubling this year, with a notable increase in trading volumes. 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 rivalling turnover in some of Hong Kong's prominent property giants such as Wharf (Holdings).

There are expectations within the market that Hong Kong may 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, highlighted the promising signs, noting a significant number of spot bitcoin ETF applications submitted to the Hong Kong Securities and Futures Commission in recent months.

(With Reuters inputs)