Asian Crypto ETF Complex Hits a Wall, Negative Returns Sweep Through Markets

Key Takeaways

• Crypto ETFs in Hong Kong have had a dismal performance since their launch.
• Surveys have revealed that Asian retail traders prefer direct spot holdings over ETFs.
• Hong Kong approved six ETFs within three months of the US.

In a stark reversal, Asia’s fledgling crypto exchange-traded funds (ETFs) market has stalled, mired in a quagmire of negative returns and dwindling trading volume.

Despite a promising start, with Hong Kong approving six spot ETFs in short order, the bloc’s enthusiasm has dramatically cooled. A key driver of this disinterest may lie in the glaring performance gap between US and Asian ETFs.

In the US, Bitcoin and Ether ETFs have already accumulated billions in assets under management (AUM). By contrast, Hong Kong’s crypto ETF complex lags significantly behind.

Asian Crypto ETFs Post Negative Returns

In a dismal showing, Hong Kong’s spot crypto ETF market is struggling to find its footing, with a wide swathe of products posting negative returns.

The region’s top BTC and ETH ETFs have delivered underwhelming performances, with returns ranging from -5% to -20%—a far cry from the high expectations that accompanied their launch.

The underwhelming performance can be attributed, in part, to the prevailing volatility and stagnation that has gripped the broader crypto market.

Despite the anticipated boost from the halving event, Bitcoin and Ethereum have failed to muster significant upward momentum. Instead, they languish in a state of dormancy that has rattled investor confidence.

However, perhaps more worrying than pedestrian returns is the precipitous decline in trading volume and AUM for Hong Kong’s ETFs.

This downtrend speaks to a deeper malaise—a growing wariness among investors toward these products, which threatens to entrench the cycle of low demand and subpar performance that has dogged the market thus far.

Hong Kong’s Overestimated Demand

For a while, it seemed as though Hong Kong was primed to become the hub of crypto activity in Asia, with a slew of regulatory changes aimed at luring in crypto companies and fostering innovation.

However, a closer look at the demand for crypto ETFs in the region reveals a far more lukewarm reception.

Despite the government’s efforts to establish a pro-crypto framework, the trading volume and AUM of their ETFs have disappointed. It appears that regulators may have misjudged the market’s appetite for such products or perhaps failed to raise awareness among potential investors.

On the contrary, the US has seen continuous demand for spot crypto ETF products, with institutional finance managers filing for spot ETF approvals for half a decade.

The US regulators first approved futures-based crypto ETFs in 2021 and declined spot ETFs, citing lower market capitalization. Eventually, in 2024, the securities regulator also approved multiple spot ETFs.

Today, the trading volumes  for these US-based ETFs tell a different story—one of billions of dollars in invested capital and a thriving market that Hong Kong can only aspire to match.

Two Different Crypto Markets

 The US and Hong Kong crypto landscapes couldn’t be more different.

In the US, institutional players with strong retail support dominate the market. On the other hand,  Hong Kong’s market skews decidedly towards individual investors. Despite its proximity to mainland China and a regulatory environment that has shown promise, Hong Kong has thus far failed to lure in major institutional investors.

In Asia, retail crypto traders tend to favor direct ownership of cryptocurrencies over gaining exposure through investment funds or ETFs.

A Nikkei survey  of 100 attendees at a blockchain event in Taiwan drives this point home: not a single respondent reported investing in or expressing interest in investing in ETF products.

For a time, spot crypto ETFs were hailed as a watershed moment in crypto’s evolution. But as bearish market trends and disappointing returns have taken hold, the initial enthusiasm has begun to dissipate—particularly in Asia.

About the Author

Prashant Jha

Prashant Jha is a crypto-journalist focused on the US and UK markets, his interests lie in blockchain technology and crypto adoption across emerging economies.

See more

[email protected]