- Concurrently, Ether ETFs experienced $6.6 million in withdrawals, reflecting a broader lack of confidence in cryptocurrency markets.
- This sharp withdrawal followed a drop in Bitcoin prices due to the post-halving reduction in mining rewards.
On May 13, Hong Kong’s Bitcoin and Ethereum exchange-traded funds (ETFs) recorded their largest net outflow to date, erasing all the gains made since their inception less than two weeks earlier. This marked decrease in fund performance and investor sentiment led to substantial withdrawals from these cryptocurrency investment products.
The Bitcoin ETFs based in Hong Kong, overseen by Bosera, ChinaAMC, and Harvest Global, saw a total net withdrawal of $32.7 million. Within this group, the ChinaAMC Bitcoin fund suffered the most substantial withdrawals, with $15.5 million being pulled out, as reported by Farside Investors. This marked withdrawal indicates a shift in investor confidence and has resulted in a downturn in the funds’ performances.
Since May 9, the net outflows from these crypto ETFs have amounted to $52.5 million. This trend of consistent withdrawals reflects a growing disinterest among investors, triggered by market volatility. Notably, on May 13 alone, the funds saw outflows totaling $20.9 million, which exceeded the total inflows of $18.4 million recorded up to May 10, highlighting the quick reversal in investor actions.
In tandem, the Ether ETFs, managed by the same firms, saw net outflows totaling $6.6 million. Both Harvest Global and ChinaAMC reported withdrawals of $3 million from their respective Ether funds. This decline is significant, especially considering the smaller market size of Ether ETFs compared to their Bitcoin counterparts. This is the first instance of withdrawals from Harvest Global’s Bitcoin ETF, which amounted to $9.8 million, starkly contrasting the initial gains post-launch.
This downturn in ETF performance coincides with Bitcoin trading below $61,000 over the weekend, attributed to the post-halving slump. This event, which occurred on April 20, reduced Bitcoin mining rewards by 50%, introducing a scarcity mechanism that typically leads to a price drop as the market adapts to the reduced supply.Â
The investor response to this price decline was prompt, with significant withdrawals from the Bitcoin ETFs in anticipation of further price drops. Historically, halving events have temporarily reduced Bitcoin prices before potentially fostering long-term increases. However, the immediate investor reaction this time was to reduce exposure.
According to SoSoValue, the Hong Kong Bitcoin Spot ETF had a net redemption of 519.5 Bitcoins in a single day on May 13. The total number of Bitcoins held was 3,560, the single-day turnover was US$4.25 million, and the total net assets were US$219 million. It has experienced net… pic.twitter.com/woI7nKqIqO
— Wu Blockchain (@WuBlockchain) May 14, 2024
Comparatively, the scale of Hong Kong’s crypto ETF market is much smaller than that in the United States, where 11 spot Bitcoin ETFs manage assets exceeding $50 billion. Hong Kong’s ETFs collectively manage assets totaling $179.2 million, with Bitcoin ETFs accounting for 88.5% of these assets, and the rest allocated to Ether ETFs.
