A recent Bloomberg report claims that Bitcoin liquidity is shifting increasingly towards US cryptocurrency exchanges, indicating a fundamental shift in the market dynamics brought about by the launching of the recently authorised spot ETFs (exchange-traded funds) for the top digital asset.
According to data cited by research firm Kaiko, US trading venues have become the central hub for Bitcoin trading, with nearly half of all bids and asks within a 2% range of the mid-price of the cryptocurrency since the year’s beginning.
Spot ETFs That Are Changing Cryptocurrencies
The landscape of digital asset trading has changed due to the rise of spot Bitcoin ETFs in the US, with several spot ETFs launched on January 11, along with the conversion of the Grayscale BTC Trust into an ETF.
Bloomberg reports that over the past year, the combined inflow of approximately $5 billion into these US-based spot Bitcoin ETFs has driven the price of the cryptocurrency to all-time highs.
Notably, since the start of the year, trading venues have accounted for almost half of all bids and asks within a 2% range of Bitcoin’s mid-price; this contrasts with the trend observed in 2023 when non-US platforms dominated the BTC market depth.
The volume of bids and asks near the mid-price or market depth indicates the liquidity levels necessary to execute orders without significantly affecting prices.
One of the spot ETF issuers, VanEck, has Matthew Sigel as head of digital-asset research. He noted:
The favourable price movement of bitcoin has been most noticeable during US trading hours, particularly in the hour before the market closes at 4 p.m.
Furthermore, according to data from Kaiko, 57% of Bitcoin trading against the US dollar now takes place during US market hours, compared to 48% in 2023.
Every weekday at the US market close, Bloomberg reports that “the new spot ETFs calculate their net asset value” against particular benchmarks, assisting in the price discovery process for Bitcoin.
Head of research at cryptocurrency prime broker FalconX, David Lawant, commented on this, revealing that this procedure offers a “transparent and dependable reference point” that enables investors to consolidate “large trades at designated times,” potentially reducing their impact on the market.
The Market Prospects for Bitcoin
Conversely, Bitcoin has continued to rise despite a minor retracement of 1.2% over the last day. Over the previous few weeks, it has increased by over 20%, with a trading price above $51,000.
Lawant suggests that investors keep a careful eye on spot BTC ETF inflows because shifts in buying activity may accompany shifts in price.
Market analyst Michaël van de Poppe agrees that Bitcoin may experience a correction that could drop the cryptocurrency by as much as 40%.
