Hong Kong Sees First Crypto ETF Liquidity Fund Worth $128M

• Hong Kong has seen its first crypto ETF liquidity fund.
• The fund was launched jointly by three firms.
• The fund’s launch comes a week after the “disappointing” debut of Hong Kong crypto ETFs.

Three Asian-based ventures have partnered to launch Hong Kong’s first crypto ETF liquidity fund, valued at tens of millions of dollars.

The liquidity fund’s arrival comes a week after the Hong Kong Bitcoin and Ether ETFs made a lukewarm debut on April 30, amassing $112 million in first-day total turnover. This is a sharp contrast to the $4.6 billion recorded by U.S.-listed Bitcoin ETFs on their first day of trading.

Hong Kong Crypto ETFs Receive Liquidity Boost

According to an announcement dated May 8, LD Capital, Antalpha Ventures, and Highblock have jointly established a $128M (HKD 1 billion) liquidity fund to provide market-making services to Hong Kong’s crypto exchange-traded funds.

The six crypto ETFs approved by the Hong Kong Securities and Futures Commission include ChinaAMC, Harvest Global, and Bosera International’s Bitcoin spot ETF and Ethereum spot ETF.

Besides enhancing overall liquidity and improving the efficiency of capital flows into the ETFs, the fund aims to help mitigate liquidity fluctuation risks and transactional volatility.

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“This strategic initiative marks a significant step forward in enhancing the financial infrastructure of Hong Kong’s ETF market, promising to bolster investor confidence and market stability,” the statement read.

While the fund’s debut is expected to boost market performance, some observers believe the Hong Kong crypto ETF market may not catch up with that of the U.S.

The Market Outlook

Following the first outflows from ChinaAMC and Harvest Global funds on May 7, Farside Investors summed up the market’s outlook.

“Asia is a big place and it has a very large capital market, but Asia/HK does not have a large ETF industry like the US. At the same time, many Asian's who have a broker that allows them to purchase HK ETFs, can already buy US ETFs with that account,” Farside wrote .

In the meantime, Bloomberg Intelligence’s Rebecca Sin recently forecasted that Hong Kong crypto ETFs could see as much as $1 billion in inflows “over two years.”

Read more about Hong Kong crypto ETFs debut from the perspective of analysts:
Analysts Evaluate Hong Kong Bitcoin ETFs’ Disappointing Debut

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