Hong Kong to Launch Asia's First Inverse Bitcoin ETF，Is China about to become Asia’s crypto market leader?

On July 23, Hong Kong is set to introduce Asia’s first inverse Bitcoin exchange-traded fund (ETF), marking a significant milestone in the crypto financial product domain. This development was reported by the South China Morning Post.

Introduction of CSOP Bitcoin Inverse ETF

The CSOP Bitcoin Futures Daily (-1x) Inverse Product, managed by CSOP Asset Management, will be officially registered with the symbol 7376.HK.

This product allows investors to profit from declines in Bitcoin prices, reflecting a maturing market that offers innovative ways to diversify within the crypto sector.

Operational Mechanism

The inverse ETF aims to achieve the inverse of the daily performance of the S&P Bitcoin Futures Index.

This is achieved through a futures-based replication strategy, involving short positions in spot-month Bitcoin futures contracts on the Chicago Mercantile Exchange. Essentially, the product enables investors to benefit from Bitcoin price drops.

Product Listing and Target Audience

Scheduled to list on the Hong Kong Stock Exchange at approximately 7.8 Hong Kong dollars per unit, the inverse ETF is designed for investors seeking sophisticated investment options in the cryptocurrency market.

However, CSOP Asset Management has cautioned about the high risks involved, including the potential for extreme price volatility that could result in significant losses, with values potentially dropping by more than 20% in a single day.

Hong Kong's sandbox program

This development aligns with Hong Kong's broader efforts to integrate with the crypto industry. Recently, ZA Bank, the largest virtual bank in the country, announced plans to offer reserve bank services to stablecoin issuers.

Related Reading:Does JD’s participation in the Hong Kong sandbox program mean that mainland China’s blockade on cryptocurrencies is about to be fully liberalized?

This follows the launch of a stablecoin licensing regime, requiring crypto stablecoin operators to deposit reserve assets with local banks.

BTC price is moving upwards on the 1-hour chart. Source: BTC/USDT onTradingView.com