Hong Kong’s Bitcoin ETFs do not seem powerful enough to fully absorb the selling pressure of ETFs in the USA. Despite their exciting initial releases, the entries only compensate for a portion of the sales from the US ETFs. According to James Butterfill, the research director at CoinShares, Hong Kong ETFs registered $217 million in net entries this week. However, this amount symbolizes a lesser quantity compared to the $298 million net exits recorded from 11 US spot Bitcoin ETFs. This situation continues to cast doubts on Bitcoin’s potential revisit to the $50,000 level.
Determining Factor in Bitcoin Rally
Institutional interest in Bitcoin ETFs played a decisive role in reaching the peaks of the recent Bitcoin rally. According to CryptoQuant, as of February 15, Bitcoin ETFs represented approximately 75% of the new investments above $50,000 worldwide.
Fidelity’s Wise Origin Bitcoin Fund (FBTC) accounted for a significant portion of the May 1 exits, executing over $191 million in Bitcoin sales. Grayscale’s GBTC fund also made the second-largest daily exit on May 1, selling $167.4 million worth of BTC.
Trading Volume in Hong Kong Falls Below Expectations
Bitcoin and Ethereum-based ETFs in Hong Kong began trading on April 30, creating significant excitement among crypto holders. However, the trading volume fell below expectations.
Hong Kong-based ETFs only achieved $12.4 million in trading volume on the first day. While this figure seems low compared to the $4.6 billion trading volume of spot Bitcoin ETFs in the US on their first day, according to senior Bloomberg ETF analyst Eric Balchunas, it is quite high considering the size of the Hong Kong market.
Balchunas states that this figure is equivalent to $1.6 billion in trading volume in the US and mentions, “You must understand that Hong Kong is 1/168th the size of the US.” DFG’s founder and CEO, James Wo, noted that the initial launch of Hong Kong ETFs, despite relatively small entries, could be an important example for other countries. According to Wo, these ETFs are directing Asian markets towards cryptocurrencies, which could increase prices in the long term as more countries follow Hong Kong’s steps.
No Impact for Bitcoin
The launch of the first Hong Kong ETFs proved to be a “sell the news” situation for Bitcoin holders. Bitcoin fell below the psychological threshold of $60,000 the day after the new ETFs were launched, on May 1. Bitcoin last traded below $60,000 at the end of February.
Bitcoin lost its solid support line at the $59,000 level, affecting the short-term holder price (STH-RP) or the average purchase price of ETFs. According to Jag Kooner, the derivatives director at Bitfinex, the loss of this level could lead to Bitcoin retracting to the $50,000 levels.
