Spot ETFs Transform Bitcoin Trading Landscape: US Exchanges Take Center Stage

According to a recent report from Bloomberg, Bitcoin liquidity is increasingly gravitating towards US crypto exchanges, signaling a fundamental change in market dynamics driven by the introduction of the recently approved spot exchange-traded funds (ETFs) for the leading digital asset.

Citing data from research firm Kaiko, US trading venues have emerged as the primary hub for BTC trading, accounting for nearly 50% of the bids and asks within a 2% range of Bitcoin’s mid-price since the beginning of the year.

Spot ETFs Transforming Crypto Markets

The rise of spot Bitcoin ETFs in the US, with several spot ETFs launched on January 11 alongside the conversion of the Grayscale BTC Trust into an ETF, has reshaped the landscape of digital asset trading.

According to Bloomberg, these US-based spot BTC ETFs have collectively attracted roughly $5 billion in investor inflows, propelling BTC’s price to new heights over the past year.

Notably, while trading venues now represent nearly half of the bids and asks within a 2% range of Bitcoin’s mid-price since the beginning of the year, this contrasts with the trend seen in 2023, where non-US platforms primarily dominated BTC market depth.

Market depth, which measures the volume of bids and asks close to the mid-price, indicates liquidity levels essential for executing orders without causing substantial price swings.

Matthew Sigel, head of digital-asset research at VanEck, one of the spot ETF issuers, noted:

Bitcoin’s positive price action has been most pronounced during US trading hours, especially in the hour leading up to the 4 p.m. market close.

Data from Kaiko further reveals that 57% of Bitcoin trading against the US dollar now occurs during US market hours, up from 48% as of 2023.

According to Bloomberg, “the new spot ETFs calculate their net asset value” against specific benchmarks at the US market close every weekday, aiding in Bitcoin price discovery.”

Commenting on this, David Lawant, head of research at crypto prime broker FalconX, disclosed that this process provides a “transparent and dependable reference point”, allowing investors to consolidate “large trades at designated times,” potentially minimizing their impact on the market.

Bitcoin’s Market Outlook

Meanwhile, despite a slight retracement of 1.2% in the past 24 hours, BTC has maintained an upward trajectory, still up by over 20% in recent weeks with a current trading price above $51,000.

Lawant advises investors to closely monitor spot BTC ETF inflows, as price fluctuations may coincide with changes in buying activity.

This sentiment is echoed by market expert Michaël van de Poppe, who anticipates a potential correction in BTC, possibly reaching depths of up to 40%.

Featured image from Unsplash, Chart from TradingView