Hong Kong's Bitcoin ETFs are not strong enough to completely offset the selling pressure from ETFs in the US. Despite their promising start, these ETFs only managed to absorb some of the sales from US ETFs. James Butterfill from CoinShares reported that Hong Kong ETFs saw $217 million in net entries this week, signifying a lesser amount compared to the $298 million net exits from US spot Bitcoin ETFs. This situation raises doubts about Bitcoin's ability to reach the $50,000 mark again.
Role of Institutional Interest in Bitcoin Rally
Institutional interest in Bitcoin ETFs played a crucial role in the recent rally of Bitcoin, with CryptoQuant reporting that Bitcoin ETFs accounted for around 75% of investments above $50,000 globally as of February 15.
Funds like Fidelity's Wise Origin Bitcoin Fund (FBTC) and Grayscale's GBTC fund were significant players in Bitcoin sales, with FBTC executing over $191 million in sales and GBTC selling $167.4 million worth of BTC on May 1.
Disappointing Trading Volume in Hong Kong
Although Bitcoin and Ethereum-based ETFs began trading in Hong Kong on April 30, the trading volume did not meet expectations. Hong Kong-based ETFs only achieved $12.4 million in trading volume on the first day, significantly lower than the $4.6 billion traded by US spot Bitcoin ETFs. However, according to Eric Balchunas, a senior Bloomberg ETF analyst, this trading volume is noteworthy considering the size of the Hong Kong market.
Limited Impact on Bitcoin Prices
The launch of Hong Kong ETFs had a "sell the news" effect on Bitcoin prices, causing it to drop below $60,000 on May 1. This dip affected the short-term holder price (STH-RP) of ETFs and could potentially lead to Bitcoin retracing to $50,000 levels, according to Jag Kooner, derivatives director at Bitfinex.
Overall, the launch of Hong Kong ETFs may not be sufficient to stabilize Bitcoin prices, as the market continues to be influenced by various factors.
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