Trading volumes for US crypto 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. (Photo by: Bob Henry)
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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.
Asian crypto ETFs post negative return | Credit: LSEG
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.
Prashant Jha is a seasoned crypto journalist based in Delhi, India, with a Bachelor’s Degree in Computer Science Engineering. Passionate about the evolving world of blockchain and cryptocurrencies, he has been a dedicated voice in the industry since 2018. Prashant’s expertise lies in regulatory reporting, where he unravels complex legal and financial developments with clarity and precision. Before joining CCN in 2024, he honed his craft at Cointelegraph, establishing himself as a trusted name in crypto journalism.
His coverage spans major industry events, including the high-profile collapses of FTX, Three Arrows Capital (3AC), and LUNA, offering readers insightful analyses of their regulatory and market implications. Prashant’s technical background enables him to bridge the gap between intricate blockchain technology and its real-world applications, making his work accessible to novices and experts.
Beyond his professional pursuits, Prashant is an avid music enthusiast, often exploring diverse genres to unwind. A sports lover, he has a particular passion for cricket and frequently engages in discussions about the game. His multifaceted interests and sharp journalistic instincts make him a valuable contributor to CCN, where he continues shaping the crypto landscape's narrative.
