The first-ever cryptocurrency exchange-traded funds (ETFs) that were introduced in Hong Kong earlier this year have experienced subpar performance and a lack of investor interest, despite the initial excitement surrounding their launch.
What Happened: A recent report by Nikkei Asia revealed that these ETFs, which monitor the performance of leading currencies like Bitcoin BTC/USD and Ethereum ETH/USD, have all recorded negative returns since their inception.
ChinaAMC Bitcoin ETF, the biggest fund tracking the spot price of Bitcoin, was down 6.69% at the end of August, while Bosera HashKey Bitcoin ETF slipped 4.65% since launch.
Ethereum-based products witnessed bigger declines, with ChinaAMC Ether ETF and Bosera HashKey Ether ETF recording losses of over 20% as of August end.
This downturn was largely attributed to the ongoing volatility in the market and the ambiguity of U.S. policy on cryptocurrency assets.
Indeed, Bitcoin has taken a sharp U-turn after hitting an all-time high of $73,700 in March earlier this year, tumbling more than 25% from the crest as of this writing.
The U.S. election season has turned out to be the major contributing factor to the turbulence. According to an August report from the research unit of Southeast Asia’s largest bank by assets, DBS Group Holdings, cryptocurrency markets are volatile and “increasingly focused on the U.S. elections for cues toward greater acceptability.”
“Bitcoin prices could see additional upside if the Republicans are perceived to have a higher chance of electoral success,” the report said.
Why It Matters: Hong Kong is the only Asian region that has exposed investors to the price moves of cryptocurrency through ETFs. Conversely, in Japan and Singapore, authorities have shown a cautious approach towards approving such investment vehicles
The underwhelming performance of these Asia-based ETFs comes amid sharp outflows from their U.S.-based counterparts.
According to SoSo Value, the 12 Wall Street-listed Bitcoin funds bled more than $706 million last week, marking the second-largest weekly outflows since their launch in early January. Fidelity Wise Origin Bitcoin Fund FBTC led the exodus on Sept. 6, losing a substantial $85.52 million in Bitcoin.
Price Action: At the time of writing, Bitcoin was exchanging hands at $54,632.87, up 0.57% in the last 24 hours, according to data from Benzinga Pro. Ethe was trading at $2,286.01, up 0.15%.
Photo via Shutterstock
Read Next:
Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
