The net inflows from the recently launched spot Bitcoin exchange-traded funds (ETFs) in Hong Kong are insufficient to cover the outflows from the 11 spot Bitcoin ETFs based in the United States.
According to a post by James Butterfill, the head of research at CoinShares, the Hong Kong ETFs have seen net inflows of $217 million this week. However, this amount is lower than the $298 million net outflows generated by the 11 U.S. spot Bitcoin ETFs, as reported by Dune.
Institutional inflows from ETFs played a significant role in the recent Bitcoin rally to new all-time highs. In fact, CryptoQuant research reveals that Bitcoin ETFs accounted for approximately 75% of new investments in the cryptocurrency when it surpassed the $50,000 mark on February 15.
The majority of outflows on May 1 came from Fidelity’s Wise Origin Bitcoin Fund, which sold over $191 million worth of Bitcoin. Grayscale’s ETF also experienced significant daily outflows of $167.4 million worth of BTC on the same day, according to Farside data.
The first batch of Bitcoin and Ether-based ETFs in Hong Kong launched for trading on April 30, sparking excitement among crypto holders. However, trading activity has been disappointing, with only $12.4 million in trading volume on the first day. This is considerably lower than the first-day trading volume of U.S. spot Bitcoin ETFs, which amounted to $4.6 billion. Nevertheless, considering the size of the Hong Kong market, this figure is relatively high, equivalent to $1.6 billion in the United States, as stated by senior Bloomberg ETF analyst Eric Balchunas.
Although the inflows were relatively small, the debut of the Hong Kong ETFs could set an important precedent for other jurisdictions, according to James Wo, the founder and CEO of DFG.
The debut of the first Hong Kong ETFs proved to be a “sell-the-news” event for Bitcoin holders, as the cryptocurrency fell below the $60,000 mark on May 1. This was the first time Bitcoin traded below $60,000 since the end of February, according to CoinMarketCap.
Bitcoin lost a strong support line at $59,000, which also served as the short-term holder realized price (STH-RP) or the average inflow price of the ETFs. Jag Kooner, the head of derivatives at Bitfinex, believes that losing the $59,000 mark could result in Bitcoin revisiting the $50,000 mark.
In related news, Tether reported a record profit of $4.5 billion in Q1 2024, with the majority coming from Bitcoin and gold.