Hong Kong Expands Crypto Offerings With Inverse Bitcoin Futures

• Hong Kong will launch Asia’s first Bitcoin futures inverse product on July 23.
• The CSOP Bitcoin Future Daily (-1x) Inverse Product aims to profit from Bitcoin’s price declines.
• CSOP’s new ETF mimics the inverse daily performance of the S&P Bitcoin Futures Index.

Hong Kong is set to launch Asia’s first Bitcoin futures inverse product on July 23. The China Southern Asset Management Co., Ltd (CSOP) Bitcoin Future Daily (-1x) Inverse Product (7376.HK) seeks to generate returns from the fall in Bitcoin’s price. This product follows the launch of the CSOP Bitcoin Futures ETF (3066.HK) in December 2022.

CSOP Launches Inverse Bitcoin ETF In Hong Kong

The new ETF offered by CSOP will mimic the daily inverse of the S&P Bitcoin Futures Index. It employs a futures-based replication approach, which means it buys the CME Bitcoin Futures in the spot month. This strategy allows investors to profit from Bitcoin’s downfall.

CSOP’s inverse product will start trading on the HKEX at around 7.8 HKD per unit. The HKEX started trading spot crypto ETFs in late 2022, which include the CSOP Bitcoin Futures ETF and Ether Futures ETF.

HKEX Crypto ETFs Amass $170 Million Assets

By April 29, the HKEX crypto ETFs had attracted 1.3 billion HKD ($170 million) in assets. For instance, the Samsung Asset Management Hong Kong Bitcoin futures ETF was launched in January 2023. These ETFs are linked to cash-settled contracts listed on the CME.

In the first quarter of 2024 alone, the average daily trading volume for these virtual asset Futures ETFs reached $51.3 million. In the same period, they garnered $529 million in net inflows. This growth demonstrates the rising investment interest in cryptocurrency ETFs in Hong Kong.

Hong Kong Firms Fight Crypto Fraud

The Hong Kong Securities and Futures Commission (SFC) has recently identified seven crypto exchanges engaged in unlawful activities.

“THESE EXCHANGES PROVIDED SERVICES WITHOUT PROPER LICENSES, THUS LABELED AS “SUSPICIOUS VIRTUAL ASSET TRADING PLATFORMS.”

The HK SFC is working on creating a list of legitimate crypto trading entities to combat fraud and scams.

Chen from CSOP believes the inverse Bitcoin ETF can raise $50 million to $100 million in assets within a few years, and the company will charge a 1.99% management fee. 

Chen noted that some traders expect Bitcoin’s price to rise to $100,000 soon, Therefore, the company finds it necessary to implement new risk management measures to address this optimism.

ProShares Leads with $62.5 Million ETF

The Short Bitcoin Strategy ETF by ProShares Advisors LLC has the most significant assets, $62.5 million, and a 1.33% management fee. 

Hong Kong’s first cryptocurrency ETFs, which started trading in April, directly rival the leading US Bitcoin products.This competition is a sign of Hong Kong’s increasing prominence in the global market of crypto ETFs.

This is consistent with the general trend among countries to increase their outreach in the crypto sphere. 

Presenting the inverse Bitcoin ETF proves the city’s desire to supply various investment instruments. This move will strengthen Hong Kong’s position as one of the leading cryptocurrency hubs in the Asia-Pacific region.