 Inverse Product. This launch is part of Hong Kong's effort to become a leading crypto-friendly hub.){kind=link}
Hong Kong will soon host a new type of Bitcoin exchange-traded fund (ETF) that lets investors bet against the original cryptocurrency as per a report from Bloomberg. This comes as Bitcoin sees a rally influenced by US President Joe Biden’s decision not to run for re-election.
Bloomberg reports that CSOP Asset Management Ltd. will launch the Asia-Pacific region’s first crypto-linked inverse ETF, named the CSOP Bitcoin Futures Daily (-1x) Inverse Product. The ETF is set to launch tomorrow, according to CSOP’s Chief Executive Officer Ding Chen.
Over the summer, Bitcoin investors experienced volatility. The cryptocurrency dropped below $54,000 in early July. However, optimism grew around pro-crypto Donald Trump’s potential return to office, boosting Bitcoin to $67,234 by Monday afternoon in Hong Kong.
Hong Kong’s New Initiative to Become a Leading Crypto-Friendly Place
This inverse ETF is part of Hong Kong’s ongoing efforts to turn out to be a leading crypto-friendly hub, competing with cities like Singapore and Dubai.
In April, asset managers, together with Harvest Global Investments Ltd. A partnership between HashKey Capital Ltd. and Bosera Asset Management listed Bitcoin and Ether ETFs in Hong Kong. However, these products have seen limited achievement so far, Bloomberg stated.Â
CSOP aims to gather between $50 million and $100 million in assets for the inverse Bitcoin ETF over the next few years. The firm will charge a 1.99% management fee.
Some traders believe Trump’s influence should push Bitcoin to $100,000 soon, however, Chen warns that coping with risks or taking alternative positions may be hard with the current products. CSOP is likewise making plans to release an inverse Ether ETF.
Globally, inverse crypto exchange-traded products have attracted around $106 million to date, according to Bloomberg. The largest of these is ProShares Advisors LLC’s Short Bitcoin Strategy ETF, which has collected $62.5 million in assets and charges a 1.33% management fee.
Hong Kong and Crypto: The Story So Far
Hong Kong has been working to establish itself as a crypto hub. Authorities have licensed two crypto exchanges that allow limited retail trading.
The city’s Bitcoin and Ether ETFs use an in-kind subscription and redemption mechanism, allowing the swapping of underlying crypto assets for ETF units and vice versa. In contrast, US funds use a cash redemption model.
Currently, the six Bitcoin and Ether ETFs in Hong Kong have amassed $362 million in assets. By comparison, US spot Bitcoin ETFs, launched in January, have gathered $60.7 billion in assets.
CSOP expects demand for its inverse Bitcoin ETF to come from investors in Japan, Korea, and Singapore. This reflects the growing interest in innovative crypto products across the region.
Hong Kong’s launch of the CSOP Bitcoin Futures Daily (-1x) Inverse Product marks an important step in the city’s bid to become a major crypto hub. The ETF offers a new opportunity for traders to engage with Bitcoin, particularly in a marketplace influenced by political happenings.