I once had a topic about the expectation of a positive impact of capital flows from China to the crypto market
[1], but it seems that the liquidity of the BTC market is maintained by US exchanges.
First of all, we need to understand Market liquidity: It refers to the ease with which an asset can be bought or sold at a fair price. It is an essential factor for any healthy market, as it allows investors to enter and exit positions without significantly impacting the price
[2].
US exchanges, while representing a smaller portion of the total trading volume, contribute significantly to Bitcoin's market depth. This suggests that US exchanges are particularly adept at handling large trades without causing major price disruptions.
"The fact that US exchanges account for a significant share of global liquidity (49%) yet contribute a relatively small portion to global trade volume (13.66%) suggests that they are highly liquid.
This hypothesis is further confirmed by looking at the exchanges’ market share of 2% depth. Bitfinex accounts for the largest share, with 23.12%. Coinbase comes second with a 19.18% share, while Binance ranks 3rd with a 14.75% share and Kraken 4th with a 12.96% share[3]."This really surprised me when nearly half of the liquidity was concentrated in a single market, the US. I would be more accepting if this number was only 20%-30%. But considered carefully, this data is also reasonable to explain many important fluctuations in the market. BTC Spot ETPs were approved in the EU in 2019
[4] and Canada in 2021
[5] but their popularity and impact on the BTC market is negligible. On the contrary, before the BTC Spot ETF was approved in the US in January this year
[6], we witnessed a strong media wave about the BTC Spot ETF and its strong impact on the BTC price chart from when BlackRock filed an SEC application for this product. The movement of the 2% volatility zone thanks to the positive impact on investor sentiment has helped BTC price grow sustainably in the second half of 2023.
Currently, as BTC Spot ETF net inflows continue to increase, buying pressure in the US is supporting BTC prices extremely well in the $50K-53K zone. As the BTC Spot ETF will reach more investors through consulting services and pension funds, I believe an explosion on the BTC price chart is inevitable. Thanks to its extremely good liquidity, the US BTC market is having a huge influence on BTC price and the development of the entire crypto market.
What do you think about the extremely good liquidity of the BTC market in the US? Do you think this will help the buying/selling behavior of US investors be decisive for BTC price and the future crypto market? And is this good or bad for the crypto market?
[1]
If China soon welcomes crypto: strong bullrun?[2]
Understanding Liquidity and How to Measure It[3]
How do US exchanges contribute to Bitcoin’s market liquidity?[4]
WisdomTree Slashes Fees of European Physically Backed Bitcoin ETP[5]
Canada's Venture into Spot Bitcoin ETFs[6]
The SEC has approved bitcoin ETFs. What are they and what does it mean for investors?