Insufficient Hong Kong Bitcoin ETFs fail to alleviate US ETF selling pressure

The inflows from the newly launched spot Bitcoin exchange-traded funds (ETFs) in Hong Kong are insufficient to offset the outflows from the 11 spot Bitcoin ETFs based in the United States. According to James Butterfill, the head of research at CoinShares, the Hong Kong ETFs received $217 million in net inflows this week, whereas the 11 U.S. spot Bitcoin ETFs experienced net outflows worth $298 million this week, as reported by Dune. Institutional inflows from ETFs played a significant role in the recent Bitcoin rally to new all-time highs. As of February 15, Bitcoin ETFs accounted for approximately 75% of new investments in the world’s largest cryptocurrency when it surpassed the $50,000 mark, according to CryptoQuant research. On May 1, Fidelity’s Wise Origin Bitcoin Fund accounted for the majority of outflows, selling over $191 million worth of Bitcoin. Grayscale’s ETF came in second with daily outflows of $167.4 million worth of BTC on the same day, according to Farside data. The first batch of Hong Kong Bitcoin and Ether-based ETFs began trading on April 30, creating excitement among crypto holders. However, the trading activity has been disappointing. The Hong Kong-based ETFs only accumulated $12.4 million in trading volume on the first day, which is significantly lower compared to the first-day trading volume of U.S. spot Bitcoin ETFs, valued at $4.6 billion. Nonetheless, considering the size of the Hong Kong market, this is a substantial figure equivalent to $1.6 billion worth of trading volume in the United States, as stated by senior Bloomberg ETF analyst Eric Balchunas. While the inflows were relatively small, the introduction of the Hong Kong ETFs could establish an important precedent for other jurisdictions, according to James Wo, the founder and CEO of DFG. The debut of the first Hong Kong ETFs turned out to be a “sell-the-news” event for Bitcoin holders, as BTC fell below the $60,000 mark on May 1, a day after the ETFs’ launch. The last time Bitcoin traded below $60,000 was at the end of February, according to CoinMarketCap. Bitcoin lost a significant support line at $59,000, which also acted as the short-term holder realized price (STH-RP), or the average inflow price of the ETFs. Jag Kooner, head of derivatives at Bitfinex, suggested that losing the $59,000 mark could result in Bitcoin revisiting the $50,000 mark. Tether, on the other hand, recorded a record profit of $4.5 billion in Q1 2024, with the majority coming from Bitcoin and gold, according to related news.