Hong Kong Launches Asia's First Bitcoin Futures Inverse Product

Hong Kong is set to list the region’s first Bitcoin BTC/USD futures inverse product on Tuesday.

What Happened: The CSOP Bitcoin Futures Daily (-1x) Inverse Product (7376.HK) will be traded on the Hong Kong Stock Exchange, marking a new milestone in the evolution of crypto-based financial instruments in the region, according to a press release.

This innovative product aims to provide investment results that closely correspond to the one-time inverse daily performance of the S&P Bitcoin Futures Index, before fees and expenses.

It will utilize a futures-based replication strategy, investing directly in the spot month CME Bitcoin Futures and following a rolling strategy.

The launch comes at a time when Bitcoin’s volatility remains a significant factor in the crypto market.

In 2023, Bitcoin’s volatility reached 38.3%, surpassing that of both crude oil and the Nasdaq 100.

This high volatility, coupled with Bitcoin’s lack of intrinsic value, has created a market environment where both long and short positions can potentially yield significant returns.

Interestingly, the first quarter of 2024 saw global futures-based Bitcoin inverse products experience their highest quarterly inflow since the second quarter of 2023, totaling $79 million.

As of the end of June 2024, Bitcoin CME futures recorded a record high in net short interest among leveraged funds, reaching approximately $5.7 billion.

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Why It Matters: The introduction of this inverse product provides investors with an opportunity to potentially profit from downward movements in Bitcoin futures prices without directly participating in the bitcoin futures market.

This could be particularly relevant given the potential impacts of the upcoming U.S. presidential election, supply dynamics and Federal Reserve monetary policy on Bitcoin prices.

The product will have a listing price of about HKD 7.8 per unit, with a trading lot of 100 and a management fee of 1.99%. It has reportedly received an initial investment of around 30 million US dollars.

This development underscores the growing sophistication of crypto-related financial products in Asia and highlights Hong Kong’s role as a key player in the region’s digital asset ecosystem.

As the crypto market continues to evolve, products like these are likely to play an increasingly important role in investment strategies.

For those interested in exploring the implications of such products and the broader trends in the digital asset space, the upcoming Benzinga Future of Digital Assets conference on Nov. 19 will provide a platform for in-depth discussions.

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