_Techno

Spot bitcoin and ether exchange-traded funds have observed significant outflows on Dec. 24 due to traders trimming their portfolios before the Christmas holiday season, known for a time of reduced market liquidity and tight market positioning.
Data from SoSoValue indicated that there were total net outflows amounting to approximately $175 million on the bitcoin spot ETFs, whereas the ether spot ETFs faced total net outflows amounting to approximately $57 million. This could be attributed to the seasonal trends, whereby traders tend to avoid risks during holiday sessions due to thin markets since the desks are not fully staffed.
The biggest daily exit in the case of bitcoin ETFs was recorded in BlackRock's IBIT, which saw $91.37 million leave the fund. The second biggest exit was recorded in Grayscale’s GBTC, which saw $24.62 million leave the fund.
The Ether ETFs also faced a similar situation. Net outflows stood at 52.7 million dollars, led by Grayscale's ETHE ETF, where net outflows reached 33.78 million dollars. It marked a cumulative historical net outflow of more than 5.08 billion dollars for ETHE ETF, marking the shift towards the new structure.
Not all flows were negative, though. The Grayscale Ethereum Mini Trust ETF pulled in another $3.33 million, lifting its total inflows to $1.506 billion. This serves as an indication that despite slow market trends, investors remain active in various products based on their chosen structures and notions of efficiency.
There are also dynamics of holiday trading patterns in ETF flow data. Volumes are lower and spreads are larger around holidays; as a consequence, even a small trade order can significantly affect the net inflows and outflows throughout daily periods around major holidays and days. Thus, "short-term market action around major holidays should not be given particular attention as a change in market conviction".
Although ongoing outflows could pressure sentiment, they do not necessarily portend a bearish sentiment environment. Oftentimes, outflows simply translate to normal portfolio rebalancing or tax-driven strategies and not a gutted withdrawal of funds from a particular asset class. However, since ETF markets related to both bitcoin and ether have been generally recognized as a representation of institutional investment sentiment trends, ongoing outflows can continue to emphasize that the crypto markets remain a risk asset and that they remain sensitive to market conditions. As markets roll past the holiday period, it will be interesting to see if fund flows return to a normal trend and possibly turnover, providing a good indicator for institutional buying.

#ETHETFS

The government in Hong Kong is getting closer to adopting a fully balanced regulatory framework for virtual assets, with the target date for the enactment of new laws governing virtual asset dealers and custodians being 2026. This was confirmed by the Financial Services and Treasury Bureau and the Securities and Futures Commission following a public consultation exercise that attracted over 190 industry submissions.
These forthcoming proposals will help create a formal framework concerning virtual asset dealing and custody services governed under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance. This was supplemented by an indication from regulators that this framework will also be very much aligned with those applied in traditional securities intermediaries, indicating that Hong Kong intends to integrate its regulation of crypto assets with its traditional framework for overseeing finance.
This comes as part and parcel of Hong Kong's plans to become a premier hub for virtual assets in Asia. There has been a strong embrace of a holistic approach that will ensure fostering of innovation while at the same time having robust protections for investors. This comes at a time when mainland China has a restrictive policy towards cryptocurrencies.
There has been regulatory steam building throughout this year. The SFC had established licensing requirements for over-the-counter trade in virtual assets and is assessing derivative products and margin transactions in digital assets. In addition, there have been approved staking services offered in licensed platforms and funds. Spot exchange-traded funds for cryptocurrencies have been in operation since 2024.
When it comes to the proposed framework, it is clear that custodians will have requirements on private key protection and client asset protection, and this would include dealer requirements that adopt traditional standards expected of securities firms. All these measures can be referred to as part of the overall plan of the SFC's roadmap for ASPIRe.
On the same note, the SFC has recently conducted a consultation on regulating virtual asset advisers and asset managers. This move is based on the concept of same business, same risks, same rules implementing the same standards as in traditional advisory and fund management services. The deadline to respond to this consultation is January 23. As legislation is expected to be introduced as early as 2026, it seems that a long-term commitment for the regulated development of digital assets in Hong Kong is emerging a reflection of the territory's dedication to clarifying the defined environment as a global financial hub that is adapting to "the next phase of finance."

#Legislation