Hong Kong Launches Its First Inverse Bitcoin ETF Product

Hong Kong Launches Its First Inverse Bitcoin ETF Product

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Hong Kong, the financial hub of Asia, is making waves in the cryptocurrency world with the launch of its first inverse Bitcoin Exchange-Traded Fund (ETF) product. This innovative financial instrument allows investors to bet on a decline in the price of Bitcoin, providing a hedging tool for those who believe the cryptocurrency is due for a correction [1].

The CSOP Bitcoin Futures Daily (-1x) Inverse Product, managed by CSOP Asset Management, is set to debut on the Hong Kong Stock Exchange on July 26. The demand for such a product is driven by the volatile nature of Bitcoin and its erratic price movements. After a promising start in 2022, the market value of the first Bitcoin futures ETF launched by CSOP dropped to around $58 million due to the recent global crypto price decline [1].

While Bitcoin had a rough second quarter, losing more than 12% of its value, it rebounded strongly in the past few weeks on renewed expectations of a favorable political environment. The cryptocurrency was up slightly and traded at around $67,400 on Monday, following President Joe Biden's decision to withdraw from the presidential race [1].

Bitcoin, known for its high volatility, has been the most erratic among major global assets in the last decade, with a volatility rate as high as 38.3% in 2023, surpassing crude oil and the Nasdaq 100 [1]. CSOP's new inverse Bitcoin product aims to provide a return that closely tracks the inverse daily performance of the S&P Bitcoin Futures Index.

The launch of this inverse Bitcoin ETF product in Hong Kong demonstrates the growing significance of cryptocurrencies in the financial markets and the city's commitment to staying at the forefront of technological innovation.

References:
[1] Reuters. (2024, July 22). Hong Kong launches Asia's first inverse Bitcoin ETF. Retrieved from https://www.reuters.com/technology/hong-kong-launch-asias-first-inverse-bitcoin-etf-2024-07-22/