Hong Kong is introducing a new Bitcoin exchange-traded fund that allows investors to bet against the cryptocurrency, even as the market reaches near 6-week highs.
Ding Chen, CSOP Asset Management’s CEO, told Bloomberg that the company will debut the CSOP Bitcoin Futures Daily (-1x) Inverse Product in Hong Kong on Tuesday morning. This will be the first crypto-linked inverse ETF in the Asia-Pacific region.
A bitcoin inverse ETF is a financial tool created to yield returns that are opposite to bitcoin’s performance. When bitcoin’s price drops, the value of the inverse ETF goes up. This setup lets investors potentially make money from bitcoin’s price drops without having to directly short the asset.
CSOP Aims for $50M-$100M in Assets for New Inverse Bitcoin ETF
CSOP’s Chen believes that gathering $50m to $100m in assets for the inverse Bitcoin ETF within a few years is an achievable goal. The firm plans to charge a 1.99% management fee.
Chen mentioned that some traders believe Trump-driven optimism might push Bitcoin’s price to $100,000 very soon. She added that investors will need to either manage the risk or adopt a different strategy, which can be tough with the current products available.
The firm anticipates demand for its inverse Bitcoin ETF will mainly come from investors in Japan, Korea, and Singapore.
Hong Kong’s Bitcoin ETFs Set to Rival US Products
Inverse Bitcoin ETFs, a recent innovation, are gaining traction in major financial hubs like Canada and the US. Globally, these crypto-focused exchange-traded products have attracted over $106m in investments so far, according to Bloomberg. The leader of the pack is the Short Bitcoin Strategy ETF by ProShares Advisors LLC, with $62.5m in assets and a 1.33% management fee.
Hong Kong introduced its first cryptocurrency-focused ETFs in April. These ETFs are seen as potential competitors to popular Bitcoin products in the US. By the first quarter of 2024, the average daily turnover for the three virtual asset Futures ETFs listed in Hong Kong had increased dramatically. It surged from $8.9m last year to $51.3m.
Additionally, these ETFs attracted $529m in net inflows during the same period.
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