Author: David Lawant, Vivek Chauhan, CoinDesk; Compiled by: Deng Tong, Golden Finance
One of the key factors in the success of Bitcoin is the emergence of new trading infrastructure and investment methods, and opening them up to New investors. This trend is accelerating with the recent launch of spot BTC ETFs.
With the exception of liquidity providers and trading platforms, we don’t yet know much about how these massive changes will alter the Bitcoin market structure.
As market structures mature, we canexpect inherent volatility to decrease. Here, we explore how several key shifts associated with the launch of spot ETFs are contributing to this change.
The recent launch of ETFs has apparently resulted in underlying spot Bitcoin trading Significant increase in volume. It’s worth noting that a disproportionate share of thisincrease in trading volume occurs primarily between 3pm and 4pm ET, or close to ETF pricing time.
The chart below shows the daily Bitcoin trading volume percentage starting from 3:00 to 3:30 PM ET, for major trading pairs. Trading activity in these two time periods, which generally account for less than 5% of total trading volume, now accounts for 10-13%.
By providing more and more The more transparent and consistent a reference point recognized by more market participants, ETF fixing allows investors to aggregate large trades at the same time, thereby reducing their market impact and overall market volatility.
Three exchanges currently listing spot Bitcoin ETFs have asked the U.S. Securities and Exchange Commission (SEC) to allow them to list options on these ETFs. These applications can take anywhere from one to eight months to be evaluated by the SEC, and there are some complexities related to their clearing and settlement processes.
If this new class of options is approved, the Bitcoin options market could get a significant boost. The Bitcoin options market is currently divided between investors who trade on offshore exchanges that are inaccessible to Americans or on platforms used only by large institutions. Allowing options based on spot Bitcoin ETFs could significantly expand the options market beyond these two markets.
Overall, the Bitcoin options market should continue to increase in importance in 2024, even after last year’s huge growth. A moremature options market can reduce volatility because it allows investors to express a broader range of investment strategies and allows even the most liquid ETFs to become more liquid. It also amplifies the importance of events such as options expiration and trader positioning as drivers of price action.
It is exciting to see the ETF revolution now having a positive impact on the Bitcoin market. The launch of spot Bitcoin ETFs is here and will likely continue to increase investor participation, perhaps similar to the launch of gold ETFs in the early 2000s.
In just over two weeks since its launch, the daily trading volume of the spot Bitcoin ETF has exceeded $1.5 billion. To put it into perspective, this volume is roughly equivalent to 20% of Bitcoin’s volume on a good trading day in the spot market.
As innovation in cryptocurrency ETFs continues, we expect ETF-related trading activity to continue, which should dampen Bitcoin volatility and aid the maturation of this emerging asset class.
Digital Economy, Crypto Market, Binance Research | Global Market Volatility and Crypto Assets Where to Go in the Future? Golden Finance, The market is still in its early stages and is expected to continue to fluctuate.
JinseFinanceThe Bitcoin market is in an interesting spot, with the average Bitcoin price still up 2x while most short-term holders are underwater. Many volatility indicators are also severely compressed, suggesting that more volatility is coming.
JinseFinance2023 witnessed Binance's struggle as regulatory pressures led to a significant drop in market share below 50%. While other exchanges like OKX gained ground, the crypto landscape remains dynamic, setting the stage for a competitive 2024.
SanyaRebecca Patterson's analysis raises concerns about the U.S. economy achieving a soft landing in 2024. Potential risks include policy changes, geopolitical conflicts, and commodity price shifts. Investors are cautioned about the possibility of prolonged higher interest rates, impacting equities and refinancing activities. Patterson recommends strategic investments based on different economic scenarios.
BerniceBitcoin's recent 7.5% plunge, amidst factors like regulatory shifts and market leverage, highlights the unpredictable volatility and complex dynamics of cryptocurrency markets.
YouQuanUnderstanding the co-movement of volatility across different cryptocurrencies at high frequencies is crucial for traders, investors, and researchers.
BitcoinworldTwo key themes emerged: look at the fundamentals of a project, and expect market volatility.
BeincryptoAave is freezing markets with low liquidity and high volatility, to protect against future market manipulation attacks.
Crypto PotatoCryptocurrencies are inherently and, as posterity would indicate, irrevocably volatile; writing for Forbes in 2013, journalist Timothy Lee penned a ...
BitcoinistIn the face of extreme fear in the Bitcoin market, miners are unfazed and may even welcome a downturn as it opens up the opportunity to gain more hash power.
Cointelegraph