Asia’s First Bitcoin Inverse ETF to Launch in Hong Kong

Hong Kong is set to host Asia’s first exchange-traded fund (ETF) that will allow investors to bet against Bitcoin.

CSOP Asset Management is launching the region’s new cryptocurrency-linked inverse ETF, Bloomberg and other media outlets reported on Monday. The new product is scheduled to begin trading on the Hong Kong Stock Exchange (HKEX) tomorrow, July 23.

Called the ‘CSOP Bitcoin Futures Daily (-1x) Inverse Product’, the new vehicle invests in short positions in Bitcoin futures contracts traded on the Chicago Mercantile Exchange (CME), giving traders exposure to the daily inverse performance of the implied Bitcoin futures index.

Short positions are a way to predict an asset’s falling price, so CSOP’s new product will allow investors to profit in a regulated manner from price corrections in the flagship cryptocurrency.

CSOP, which already offers Bitcoin and Ethereum futures ETFs, will act as administrator of the inverse ETF, while HSBC will act as trustee. The fund will have an annual fee of 1.99% and aims to raise between $50 million and $100 million in assets under management within one to two years, according to reports.

Cryptocurrency ETFs Gain Momentum

The product comes at an opportune time. The digital asset market has faced extended volatility in recent weeks. Bitcoin momentarily dipped below $54,000 in early July, down 28% from its all-time high near $74,000 in March.

The launch of Asia’s first cryptocurrency inverse ETF also comes amid increased appetite for this class of regulated funds. In January, the US saw the debut of the first spot Bitcoin ETFs, and local traders are set to welcome spot Ether ETFs later this week.

Subsequently, Bitcoin-based spot ETFs have multiplied their presence in other markets, such as Australia and Hong Kong. Global cryptocurrency investment products received net inflows for the third week in a row last week, totaling USD 1.35 billion, led by US Bitcoin ETFs, according to the latest report from CoinShares.

For Hong Kong, the inverse ETF is the latest move in a multi-year effort to establish the city as a cryptocurrency-friendly hub to rival Singapore and Dubai. Local regulators have been taking progressive regulatory steps for this sector in recent years.

Bitcoin rose above $68,000 on Sunday amid renewed optimism about the political landscape following Joe Biden’s official withdrawal from the presidential race.

At the time of publication of this article, Bitcoin (BTC) is trading at around $67,800, up just under 1% on the day and more than 7% on the week, according to CoinMarketCap data.