Hong Kong Set to Launch Asia’s First Bitcoin Futures Inverse Product: What it Means for Traders

Hong Kong set to make history by launching Asia's first Bitcoin futures inverse product on its stock exchange. The new financial instrument, introduced by CSOP Asset Management, is expected to offer investors a way to profit from Bitcoin's downturns. 

On Tuesday, CSOP Asset Management will debut the CSOP Bitcoin Futures Daily (-1x) Inverse Product on the Hong Kong Stock Exchange. 

"This product creates opportunities for investors to capitalize on Bitcoin's downside movements," said Ding Chen, CEO of CSOP Asset Management. 

The introduction of this inverse product follows the recent debut of spot crypto ETFs in Hong Kong and aims to address the growing demand for tools that can profit from Bitcoin's volatility.

Product Details

The CSOP Bitcoin Futures Daily (-1x) Inverse Product is managed by CSOP Asset Management, with HSBC serving as the trustee. The ETF charges an annual fee of 1.99% and aims to attract between $50 to $100 million in assets under management within one to two years.

Unlike direct Bitcoin investments, this product primarily invests in short positions of Bitcoin futures traded on the Chicago Mercantile Exchange. This strategy enables investors to profit from declines in Bitcoin's market prices without needing to short the cryptocurrency directly or buy put options.

Bitcoin has long been known for its extreme price fluctuations. In 2023, the cryptocurrency exhibited volatility as high as 38.3%, surpassing other major global assets like crude oil and the Nasdaq 100. The inverse ETF is designed to take advantage of these swings, allowing traders to hedge against or speculate on Bitcoin’s price declines.

The new product is expected to attract risk-tolerant investors looking to navigate Bitcoin's volatile market. Inverse ETFs are gaining traction globally, with similar products like the ProShares Short Bitcoin ETF (BITI) in the U.S. already managing over $70 million.

Hong Kong's Cryptocurrency Initiatives

The Securities and Futures Commission has implemented a licensing regime for centralized exchanges, and the Hong Kong Monetary Authority is working on regulating stablecoins. These measures are part of the city's broader strategy to enhance its virtual asset sector and attract international investment.

The Hong Kong government has also taken an important step in cryptocurrency investment with the conditional approval of its first spot Bitcoin and Ether exchange-traded funds (ETFs) on April 15.