BlackRock Inc. and Fidelity Investments' spot Bitcoin ETFs have received $10 billion in net inflows and driven the token's price to historic highs. Bitcoin reached $72,900 for the first time on Tuesday before falling to $70,000. ETFs affect price, but they also affect Bitcoin trading. Their arrival is aligning crypto trading patterns with regular markets.
The 10 spot Bitcoin ETFs introduced on Jan. 11 saw trading volumes rise in late February as Bitcoin rose. ETFs received $10.4 billion of $61 billion in spot Bitcoin trading volumes on March 5.
After the ‘Alameda gap’ caused by the collapse of FTX, Sam Bankman-Fried's exchange, and its sister firm Alameda Research, ETFs are increasing spot Bitcoin trade liquidity. Since Bitcoin ETFs started, market depth—the crypto market's ability to absorb huge orders without price ructions—has strengthened.
After spot ETFs were approved in early January, Bitcoin liquidity has increased 60% in the past two months. Both market makers and traders have returned, with BTC 2% depth nearing pre-FTX US dollar levels, Kaiko analyst Dessislava Aubert told Bloomberg via email.
The average crypto trader now works different hours due to ETFs and institutional investors. Traditional crypto markets exchange assets 24/7, seven days a week.
“Over 55% of Bitcoin trading against the US dollar now occurs during US hours, up from 47% last year, with nearly 90% on weekdays,” Aubert said.
The two Bitcoin futures-based ETFs ProShares Bitcoin Strategy and ProShares Short Bitcoin Strategy accounted for 84% of US crypto-linked exchange traded product trading volume before the spot ETFs were approved. That dropped to 16% in March as the 10 spot ETFs, which charge less than ProShares products, account for about 80% of trading volumes.
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