On July 23, 2024, Hong Kong will make a landmark move in the financial markets with the launch of Asia’s first Bitcoin futures inverse product. The new exchange-traded fund (ETF), the CSOP Bitcoin Futures Daily (-1x) Inverse Product (7376.HK), is set to debut on the Hong Kong Stock Exchange (HKEX). This innovative product allows investors to profit from declines in Bitcoin’s price, marking a significant development in cryptocurrency investment options in the region.
Asia’s First Bitcoin Futures Inverse ETF
The CSOP Bitcoin Futures Daily (-1x) Inverse Product will be introduced with an initial price of approximately 7.8 Hong Kong dollars (HKD) per unit. The ETF is designed to provide investment results that mirror the inverse daily performance of the S&P Bitcoin Futures Index. This objective is achieved through a futures-based replication strategy, which involves direct investments in spot-month Bitcoin futures contracts traded on the Chicago Mercantile Exchange (CME).
Ms. Ding Chen, CEO of CSOP Asset Management, commented, “As an ETF issuer esteemed by investors in the APAC region, CSOP has always aimed to offer comprehensive and diversified investment products. We are currently the leading provider of Leveraged and Inverse products in Hong Kong, with a market share of 99%.” Chen highlighted that this new product provides investors with a unique opportunity to benefit from declines in Bitcoin’s value.
Market Context and Recent Trends
The launch of this ETF comes during a period of volatility for Bitcoin. The cryptocurrency’s value fell below $54,000 in early July 2024 but has since rebounded amid positive pro-crypto sentiments, including speculation about former President Donald Trump’s potential political future. This backdrop of market fluctuation underscores the relevance of inverse products for investors seeking to hedge against Bitcoin’s price movements.
CSOP’s Regional Expansion
The introduction of the CSOP Bitcoin Futures Daily (-1x) Inverse Product represents a continued expansion of CSOP within the Asia-Pacific region. It builds on the successful debut of the CSOP Bitcoin Futures ETF (3066.HK) in December 2022, one of the first crypto-linked ETFs in the region. Since late 2022, HKEX has offered spot crypto ETFs, including both Bitcoin and Ether Futures ETFs, tracking cash-settled contracts traded on the CME.
In January 2023, Samsung Asset Management Hong Kong also launched a Bitcoin futures ETF. As of April 29, 2024, these ETFs have collectively accumulated 1.3 billion HKD (approximately $170 million) in assets under management.
Global and Regional ETF Landscape
Globally, inverse crypto exchange-traded products have attracted around $106 million in investments. The largest of these is the Short Bitcoin Strategy ETF from ProShares Advisors LLC, which has garnered $62.5 million in assets and charges a 1.33% management fee. In Hong Kong, the total assets held by Bitcoin and Ether ETFs have reached $362 million. In comparison, spot Bitcoin ETFs launched in the U.S. in January 2024 have amassed a substantial $60.7 billion in assets.
The launch of the CSOP Bitcoin Futures Daily (-1x) Inverse Product marks a notable advancement in Hong Kong’s financial market and reflects the growing diversity of investment products available to cryptocurrency investors. This development highlights Hong Kong’s emerging role as a key player in the evolving landscape of crypto investments in the Asia-Pacific region.
