The Hong Kong Stock Exchange (SEHK) will launch Asia’s first BTC inverse product on Tuesday, July 23. This coincides with the iconic Spot Ethereum ETF launch scheduled for the same day in the U.S. The innovative inverse product, managed by CSOP Asset Management Limited, aims to provide sophisticated investors with a new tool for short-term trading or hedging.
Overview Of The CSOP Bitcoin Futures Daily Inverse Product
Hong Kong’s CSOP Bitcoin Futures Daily (-1x) Inverse Product is a futures-based investment vehicle. It targets the inverse (-1x) of the daily performance of the S&P BTC Futures Index. This means that if the index declines, the product aims to increase in value, and vice versa.
The product achieves this by investing in short positions of BTC futures traded on the Chicago Mercantile Exchange (CME). This includes both standard and micro BTC futures.
The product is managed by CSOP Asset Management Limited, with HSBC Institutional Trust Services (Asia) Limited serving as the trustee. The product has an annual average daily ongoing charge of 2.00% and an estimated annual average daily tracking difference of -0.05%. The financial year ends on December 31, and any potential distributions are at the manager’s discretion, with no guarantee of regular distributions.
Key features of the product include:
1. Denomination and Trading: The product is denominated in USD, but it is traded on the SEHK in HKD. Creations and redemptions are conducted in USD.
2. Short-Term Investment: This product is designed for daily trading. Holding the product longer than a day could result in performance deviations from the intended inverse performance.
3. Sophisticated Investor Target: The product is aimed at sophisticated trading-oriented investors who understand the risks and monitor their investments daily.
4. Risks: Investors should be aware of the extreme price volatility associated with Bitcoin futures, potential large roll costs, operational risks, and the possibility of losing their entire investment in a single day due to these factors.
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Launch Significance
The launch of the CSOP BTC-based inverse product marks a significant milestone for the SEHK and the broader Asian financial markets. Moreover, as the first of its kind in Asia, it provides investors with a unique opportunity to bet against the price of BTC using a regulated financial instrument.
Recently, Bitcoin and other cryptocurrencies have seen unprecedented volatility. This attracted both interest and caution from investors worldwide. Hence, the CSOP Bitcoin Futures Daily (-1x) Inverse Product allows investors to potentially profit from declines in the BTC price
This acts as a hedging tool against market downturns. This can be particularly valuable in a market characterized by high volatility and rapid price movements. However, the product is not without its risks.
The extreme volatility of BTC futures means that the product’s value can fluctuate significantly in a short period. Historical data suggests that the value of the product could drop by over 20% in a single day, underscoring the importance of careful, informed trading.
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The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
