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© Reuters. FILE PHOTO: Representations of the cryptocurrency Bitcoin are seen in this illustration dated August 10, 2022. REUTERS/Dado Ruvic/Illustration/Archive photo
By Summer Zhen
HONG KONG (Reuters) – Hong Kong’s largest bitcoin futures exchange-traded fund saw assets under management rise fivefold to just over $100 million in the past five months, as local investors chased the rally in the world’s most prominent cryptocurrency.
Hong Kong has been a relative latecomer to crypto trading, approving its first three cryptocurrency futures ETFs in late 2022.
CSOP Asset Management, which manages the CSOP ETF, said demand increased significantly in February.
The approval and launch of spot Bitcoin ETFs in the U.S. this year has boosted demand from investors who believe the token’s limited supply will drive up prices, said Alessandro Zhu, who oversees crypto products and deputy head for fixed-interest securities at CSOP Asset Management.
The significant outperformance of Hong Kong stocks has also boosted demand, he added.
Zhu noted that although cryptocurrency trading is banned in mainland China, Chinese offshore financial institutions can invest in Bitcoin ETFs in Hong Kong.
Bitcoin has gained 45% this month alone and is approaching its November 2021 record high of around $69,000, trading at around $63,000 on Thursday.
The assets under management of the CSOP Ether Futures ETF have also benefited and have doubled this year.
The quantities have increased dramatically.
The average daily turnover of the CSOP Bitcoin Futures ETF has increased to US$2.8 million this year, compared to US$0.97 million last year, and is now in line with the turnover of some Hong Kong real estate giants such as Wharf (Holdings).
Some market participants expect Hong Kong to approve the first spot Bitcoin ETF this year as authorities look to develop the city as a hub for virtual assets.
“Hong Kong’s Bitcoin ETF is showing promising signs with a large number of (spot Bitcoin ETF) applications to the Hong Kong Securities and Futures Commission in recent months,” said Kennix Chan, managing director of Victory Securities.
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