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Asia's first inverse Bitcoin ETF to launch in Hong Kong amid crypto market volatility

Vince Dioquino

Jul. 22, 2024

The inverse ETF would investors to bet against Bitcoin as it rallies on US political developments.

Photo by Erling Løken Andersen on Unsplash, with modifications from author.

Key Takeaways

Hong Kong's inverse Bitcoin ETF launch showcases the city's ambition to become a leading crypto financial hub.
The new ETF reflects growing demand for sophisticated crypto investment tools amid political-driven market volatility.

Hong Kong is set to introduce Asia’s first crypto-linked inverse exchange-traded fund (ETF), allowing investors to bet against Bitcoin amid market fluctuations influenced by US political developments.

CSOP Asset Management will launch the CSOP Bitcoin Futures Daily (-1x) Inverse Product on Tuesday, marking a significant development in Hong Kong’s crypto financial landscape. The product aims to provide investors with a way to hedge against or profit from potential Bitcoin price declines.

This launch comes as Bitcoin experiences volatility, having dropped below $54,000 in early July before rebounding to $67,234 as of Monday afternoon in Hong Kong. The recent rally has been attributed to optimism surrounding pro-crypto Donald Trump’s potential return to office following US President Joe Biden’s decision to abandon his reelection bid.

For Hong Kong, the inverse ETF represents another step in its ongoing efforts to establish itself as a crypto-friendly hub, competing with cities like Singapore and Dubai. The city has already seen the launch of Bitcoin and Ether ETFs by asset managers including Harvest Global Investments Ltd. and a partnership between HashKey Capital and Bosera Asset Management on April 30, though these products have received a lukewarm reception so far.

CSOP CEO Ding Chen expressed confidence in the new product, stating that collecting between $50 million and $100 million in assets for the inverse Bitcoin ETF over a couple of years is “definitely achievable.” The firm will charge a management fee of 1.99%. Chen also noted that some traders anticipate Bitcoin could reach $100,000 “very soon” due to Trump-fueled optimism, highlighting the need for risk control options for investors.

Globally, inverse crypto exchange-traded products have attracted approximately $106 million to date. The largest of these funds, the Short Bitcoin Strategy ETF from ProShares, has accumulated $62.5 million in assets with a 1.33% management fee. Hong Kong’s crypto ambitions extend beyond ETFs, with authorities licensing two crypto exchanges for limited retail trading and implementing an in-kind subscription and redemption mechanism for ETF units.

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