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Thanks to the introduction of Bitcoin Exchange Traded Funds (ETFs) in the United States, Bitcoin trading on U.S. cryptocurrency exchanges appears to be more accessible compared to overseas platforms.
Data from research firm Kaiko reveals that, on average, trading activity on U.S. exchanges accounts for nearly half of Bitcoin spot prices within a 2% range of the mid-price so far this year.
This data encompasses the launch of Bitcoin spot ETFs in the U.S. Events like bidding and asking within a 2% range of the mid-price allow for the execution of orders without excessively disrupting prices. The higher the number of such activities, the better the liquidity. According to this indicator, in 2023, non-U.S. platforms held the majority of shares in Bitcoin market depth.
On January 11 this year, nine U.S. Bitcoin ETFs made their debut, and on the same day, the Grayscale Bitcoin Trust, with over a decade of history, converted into a Bitcoin ETF. So far, this group of products, including offerings from BlackRock and Fidelity Investments, has attracted $5 billion in net inflows. Expectations and launches of these products have stimulated a doubling of Bitcoin prices over the past 12 months.
Increased Liquidity
Matthew Sigel, the Director of Digital Asset Research at VanEck, one of the spot ETF issuers, said, "The positive price movement of Bitcoin is most apparent during U.S. trading hours because market participants are leveraging the advantage of increased liquidity."
Some observers view Bitcoin spot ETFs as a turning point, expecting ETFs to expand the adoption of cryptocurrencies. Optimists anticipate a recovery in digital asset trading volumes from the subdued levels seen after the closure of the FTX exchange and its sister hedge fund Alameda Research during the 2022 bear market.
The impact of ETFs is already evident. For example, according to Dessislava Aubert, a senior analyst at Kaiko, 57% of Bitcoin-to-USD trades are now conducted during U.S. market hours, compared to 48% a year ago.
Open Interest in Futures Contracts
It is noteworthy that, in the derivatives sector, open interest in Bitcoin futures on the Chicago Mercantile Exchange has rebounded to historic highs when ETFs were approved. The increase in open interest indicates a growing interest from U.S. institutions in cryptocurrency-related risk exposure and hedging.
At the close of each U.S. market day, Bitcoin ETFs calculate their net asset value based on a dedicated benchmark, a process that contributes to price discovery for Bitcoin.
David Lawant, the Head of Research at cryptocurrency prime broker FalconX, mentioned that this "transparent, reliable reference point" enables investors to "execute large trades at a specified time," potentially reducing the impact on the market.
Lawant noted that investors need to closely monitor ETF inflows because "when buying pressure diminishes, prices are more likely to fall. |
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Post time 28-2-2024 08:09:54