Hong Kong is launching a new Bitcoin-listed fund that allows investors to bet against the cryptocurrency even as the market peaks.
Ding Chen, CEO of CSOP Asset Management, told Bloomberg that the firm will debut the CSOP Bitcoin Futures Daily (-1x) Inverse Product in Hong Kong on Tuesday morning. It will be the first inverse ETF linked to a cryptocurrency in the Asia-Pacific region.
A bitcoin inverse ETF is a financial tool designed to produce a return inverse to bitcoin’s performance. When the price of bitcoin falls, the value of the inverse ETF rises. This setup allows investors to potentially make money on bitcoin price declines without having to sell the asset outright.
CSOP aims to raise $50-100 million in assets for the new Inverse Bitcoin ETF fund
CSOP’s Chen believes that amassing $50 to $100 million in assets for an inverse bitcoin ETF within a few years is an achievable goal. The firm plans to charge a management fee of 1.99%.
Chen mentioned that some investors believe that Trump-fueled optimism could soon push the price of Bitcoin to $100,000 . She added that investors will either have to manage risk or adopt a different strategy, which may be difficult with the products currently available.
The firm predicts that demand for inverse Bitcoin ETFs will come mainly from investors in Japan, Korea and Singapore.
Bitcoin ETFs set to compete with US products
Bitcoin inverse ETFs, a recent innovation, are gaining popularity in major financial centers such as Canada and the US. Globally, these cryptocurrency-focused exchange traded products have attracted more than $106 million in investments so far, according to Bloomberg. Leading the pack is ProShares Advisors LLC‘s Short Bitcoin Strategy ETF, with $62.5 million in assets and a management fee of 1.33%.
In April, Hong Kong introduced its first ETFs focused on cryptocurrencies. These ETFs are seen as potential competitors to popular bitcoin products in the US. By the first quarter of 2024, the average daily turnover of the three virtual asset futures ETFs listed in Hong Kong had increased dramatically. It rose from $8.9 million last year to $51.3 million. In addition, these ETFs generated net inflows of $529 million during the same period.
