Hong Kong to get first bitcoin inverse investment product, adding to crypto ETFs

The new product from CSOP bets against bitcoin by investing in shorts on the Chicago Mercantile Exchange, with trading in Hong Kong to begin on Tuesday

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Hong Kong’s first inverse bitcoin product starts selling on the local exchange this week as the city seeks to diversify its crypto product offerings. Photo: EPA-EFE

Published: 5:00pm, 22 Jul 2024

Hong Kong’s first bitcoin inverse investment product, which offers returns based on declines in the price of the world’s largest cryptocurrency token, debuts on the city’s stock exchange on Tuesday, as the Asian financial hub continues to expand its virtual asset product offerings to draw investors.

The exchange’s move to list CSOP Asset Management’s new Bitcoin Futures Daily Inverse Product, the first of its kind in Hong Kong, reflects the city’s ongoing efforts to diversify its offerings of cryptocurrency-related financial products and to become a centre for such business. Hong Kong Exchanges and Clearing (HKEX) announced approval of the product in a statement last week.

The offering comes three months after the city approved the launch of six exchange-traded funds (ETFs) that invest directly into bitcoin and ether, the world’s two largest cryptocurrency tokens. The Hong Kong stock exchange was open to listing leveraged and inverse crypto products, HKEX’s head of exchange-traded products Brian Roberts told Bloomberg in April.

Inverse products are structured as ETFs but seek short-term investment results and target professional, trade-oriented investors.

Instead of investing directly in bitcoin, CSOP’s new product, denominated in US dollars, invests primarily in short positions of bitcoin futures traded on the Chicago Mercantile Exchange, the company said in regulatory filings last week. The strategy aims to allow traders to profit from declines in market prices.

These products face extreme price volatility that could wipe out investments, CSOP warned, and values may drop by more than 20 per cent in a single day.