A long awaited batch of spot Bitcoin exchange-traded funds is already influencing the way crypto markets function, just two months after they launched in the US on Jan. 11.
The spot Bitcoin ETFs brought to market by the likes of BlackRock Inc. and Fidelity Investments have already drawn net inflows of about $10 billion, while helping to push the price of the token they track to record highs. Bitcoin topped $72,900 for the first time on Tuesday, before pulling back to around $70,000.
While the impact of the ETFs on price is clear, they are also responsible for subtler changes in the way Bitcoin is traded. Their advent is bringing crypto trading patterns more closely into line with those seen in traditional markets.
Trading volumes for the 10 spot Bitcoin ETFs launched on Jan. 11 began to pick up considerably in late February, in line with Bitcoin’s surge. On March 5 alone, $10.4 billion out of a total $61 billion in spot Bitcoin trading volumes went to ETF products.
ETFs are gradually improving liquidity for spot Bitcoin traders, after a slump known as the ‘Alameda gap’ triggered by the demise of FTX, Sam Bankman-Fried’s failed exchange, and its sister firm Alameda Research.
Market depth — the crypto market’s ability to absorb relatively large orders without major price ructions — has improved since the Bitcoin ETFs launched.
Read the full article here by Sidhartha Shukla of Bloomberg News, Advisor Perspectives
