As excitement continues to grow around the introduction of ethereum and bitcoin spot ETFs in the United States, Hong Kong has embarked on its journey to establish a spot ETF market for these digital assets. However, the performance of these exchange-traded funds in Hong Kong has not matched the success seen in the United States, raising questions about the underlying factors influencing this discrepancy.
Hong Kong bitcoin ETFs struggle despite strong initial launch
Hong Kong Released six virtual asset spot ETFs on April 30, initially attracting significant interest with a combined issuance scale of $248 million, surpassing the roughly $125 million raised by U.S. bitcoin ETFs upon their launch in January.
However, despite this promising start, the subsequent performance of the market has been less than optimistic. According to a recent study analysis By Jason Jiang, OKG researcher, as of mid-May, the total assets under management (AUM) of the six Hong Kong ETFs reached approximately HKD 2 billion (about USD 264 million).
While this has a noticeable impact on Hong Kong’s local financial market, it pales in comparison to the US market, where bitcoin spot ETFs have approximately $51.4 billion in assets under management 9 months after launch.
Market activity has also shown signs of slowing. Hong Kong's total trading volume has declined Virtual Asset Spot ETF In the first few weeks, daily trading volumes exceeded HK$520 million. However, they have fluctuated downwards and dropped below HK$40 million on several occasions.
Additionally, all three bitcoin spot ETFs experienced net outflows for four consecutive days, while the ethereum spot ETF faced similar challenges.
Jiang argues that one of the main advantages of Hong Kong bitcoin ETFs is their provision for physical redemptionThis feature In theory, it is attractive to crypto-native investors and bitcoin miners. However, on-chain data suggests that miners are currently hesitant to participate, opting to monitor the market.
This cautious approach is reflected in declining miners’ wallet balances, which have hit a six-month low. Compounding these issues, Hong Kong faces challenges related to fee structures, which may deter miners from investing in the bitcoin ETF market.
Lack of staking support hampers ethereum ETF appeal
According to Jiang's analysis, the ethereum spot ETF has also underperformed, with just 15.11% of the market share and a AUM Valued at around HKD327 million, the ethereum ETF has struggled to attract investor interest.
Recent events such as the Cancun upgrade have failed to produce the anticipated surge in on-chain activity, and the lack of support for ETF staking has further diminished its appeal to potential investors.
Without the ability to betThe journalist notes that current ethereum holders may be reluctant to participate as they would lose staking income by subscribing to the ETF.
According to the researcher, several factors could determine the future of Hong Kong's virtual asset ETF market. The approval of an ethereum spot ETF based on the proof of participation The (PoS) mechanism opens the door for other conventional public chain tokens, such as Solana, to enter the market.
Furthermore, Jiang claims that spot digital asset ETFs act as a bridge that transforms niche digital assets into more mainstream securities. This shift could allow financial institutions to develop derivative products, such as leverage and wealth management tools, that were previously unattainable with physical bitcoin assets alone.
At the time of writing, btc is trading at $63,100, down 0.3% over the past 24 hours.
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