The growing acceptance of digital assets in traditional finance is no longer speculative—it's measurable. Bitcoin ETFs backed by public mutual funds have surged to record highs, signaling a pivotal shift in investor sentiment and institutional adoption. As global market dynamics evolve, Bitcoin is emerging not just as a speculative asset, but as a strategic hedge against economic uncertainty.
Record-Breaking Gains for Bitcoin ETFs
On November 12, Bitcoin ETFs issued by subsidiaries of major Chinese asset managers—including Southern Fund, China Asset Management (Harvest), CSOP Asset Management, and Boshi Fund—posted gains exceeding 9%. These products, listed in Hong Kong, achieved all-time highs amid rising Bitcoin prices and heightened investor demand.
Southern Easttop’s Bitcoin ETF, the most actively traded in the region, surged 9.8% on that day alone, with over HK$93 million in trading volume. More impressively, the fund has delivered an 87.88% return year-to-date, outperforming even the top-performing equity funds, which averaged a 69% gain over the same period. Over the past two years, Southern’s Bitcoin ETF has returned more than 3.4 times the initial investment—far surpassing the 1.1x average return of traditional equity funds.
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Why Are Bitcoin ETFs Outperforming Traditional Assets?
The surge in Bitcoin ETF performance isn’t isolated—it reflects broader macroeconomic trends and evolving regulatory landscapes.
Geopolitical Shifts and Market Sentiment
Analysts point to the U.S. presidential election outcome as a key catalyst. Donald Trump’s victory and the Republican Party’s strengthened control of Congress have signaled a potential policy shift toward crypto-friendly regulation. Unlike the previous administration, which saw the SEC take a restrictive stance on digital assets, Trump has advocated for:
- Establishing a U.S. Bitcoin strategic reserve
- Supporting domestic Bitcoin mining
- Creating clearer regulatory frameworks for cryptocurrencies
These promises have reinvigorated investor confidence. As noted in a report by Brazil’s Verde hedge fund, positioning in Bitcoin ahead of the election reflected expectations of favorable policy changes and increased congressional support for digital assets.
Bitcoin as a Defensive Asset
Traditionally viewed as volatile and speculative, Bitcoin is increasingly being categorized alongside gold and the U.S. dollar as a defensive asset. According to investment strategists at China Europe Fund, assets like gold, Bitcoin, and cash tend to outperform during periods of declining global risk appetite.
This defensive appeal is amplified by ongoing geopolitical tensions in the Middle East, where supply disruptions in oil and gas markets can trigger broader financial volatility. In such environments, investors seek alternatives outside conventional equities—making digital assets like Bitcoin more attractive.
The Institutional Stamp of Approval
One of the most significant drivers behind Bitcoin’s legitimacy is the growing involvement of publicly backed financial institutions.
From Skepticism to Endorsement
For years, traditional finance dismissed Bitcoin as a speculative bubble or even a scam. Its price movements were largely driven by high-profile endorsements—from figures like Elon Musk to institutions like Tesla, which first invested in Bitcoin in 2021. That move marked a turning point: after Tesla’s announcement, Bitcoin reversed its downward trend and entered a bull phase.
Now, that momentum has been amplified by Wall Street giants. BlackRock, the world’s largest asset manager, launched its spot Bitcoin ETF earlier in 2024, contributing to a wave of institutional inflows. According to FactSet data, total assets under management (AUM) in Bitcoin ETFs reached $34.3 billion—surpassing the AUM of iShares Gold Trust (IAU), one of the largest gold ETFs.
This crossover moment—where Bitcoin ETFs outpace established precious metal funds—marks a new era in asset allocation.
Hong Kong: The Gateway for Asian Institutional Access
Most Chinese public mutual funds access the Bitcoin market through their Hong Kong-based subsidiaries, leveraging local regulatory approvals. Southern Easttop launched Asia’s first Bitcoin futures ETF in late 2022, but it remained relatively obscure until others followed suit.
In April 2024, CSOP International, Harvest Fund (Hong Kong), and Boshi International received formal approval from the Hong Kong Securities and Futures Commission (SFC) to launch spot Bitcoin and Ethereum ETFs—the first such products in Asia.
朱皓康 (Zhu Haokang), Head of Digital Asset & Family Wealth Management at Harvest Fund (Hong Kong), emphasized that these ETFs offer a regulated, exchange-listed, and professionally managed way to access digital assets. Features like the physical creation and redemption mechanism—unique to Hong Kong’s model—allow holders of actual crypto to exchange their holdings for ETF shares, bridging the gap between decentralized and traditional finance.
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Regulatory Tailwinds Fuel Expansion
The Chinese government has indirectly supported this trend through its "going global" policy for asset managers. In 2022, the China Securities Regulatory Commission (CSRC) issued guidelines encouraging qualified fund companies to establish overseas subsidiaries and serve international clients.
Today, nearly 30 public fund firms operate subsidiaries in Hong Kong—including Rayfund, which received approval in early 2023. These platforms are now being used not just for cross-border investment, but also for launching innovative products like crypto ETFs.
Industry experts believe this infrastructure will enable more fund houses to enter the digital asset space, especially as demand grows from retail and institutional investors seeking diversified exposure.
What’s Next for Bitcoin ETFs?
With spot Bitcoin ETFs already approved in the U.S. and gaining traction in Asia, momentum is building rapidly. Morgan Stanley analysts noted that 2024’s election outcome places the U.S. at an economic crossroads—one where digital assets could play a central role in shaping financial policy.
Bitcoin’s dual appeal—as both a hedge against inflation and a high-growth speculative asset—positions it uniquely in modern portfolios. And with ETF structures reducing custody risks and improving accessibility, adoption is likely to accelerate.
Frequently Asked Questions (FAQ)
Q: What makes a Bitcoin ETF different from buying Bitcoin directly?
A: A Bitcoin ETF allows investors to gain exposure to Bitcoin’s price movements without holding the actual cryptocurrency. It’s traded on traditional exchanges, regulated, and managed by professional firms—reducing risks related to storage and security.
Q: Are Bitcoin ETFs safer than holding crypto on an exchange?
A: Generally yes. Regulated ETFs are subject to oversight, use audited custodians, and follow strict reporting standards. This contrasts with some crypto exchanges that may lack transparency or insurance protections.
Q: Why are public mutual funds entering the Bitcoin space now?
A: Institutional interest has grown due to regulatory clarity in markets like Hong Kong and the U.S., combined with strong performance and rising demand from clients seeking diversification.
Q: Can Chinese investors invest in these Hong Kong-listed Bitcoin ETFs?
A: Eligible investors can access these funds through cross-border investment programs like Stock Connect or via offshore accounts, though individual eligibility depends on local regulations.
Q: How do geopolitical events affect Bitcoin prices?
A: During times of uncertainty—such as elections, conflicts, or currency instability—investors often turn to alternative stores of value. Bitcoin’s fixed supply and decentralized nature make it appealing in such scenarios.
Q: Will more traditional funds launch crypto ETFs in 2025?
A: Yes. With early entrants demonstrating strong performance and investor demand, more asset managers are expected to expand into digital assets—especially as global regulations continue to evolve.
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