Since the first Bitcoin ETF was approved on January 10, the cryptocurrency community has been jubilant. Following it, there has been a notable narrowing of the bid-ask spreads for BTC-USD markets on three major U.S.-based exchanges: Coinbase, Kraken, and Bitstamp. This suggests that the long-awaited clearance has had a catalyst impact on the market.
The difference between the greatest price a buyer is ready to pay (the bid) and the lowest price a seller is willing to take (the ask) is known as the bid-ask spread. More trading volume, lower transaction costs, and a more liquid market are all indicated by a smaller spread, which helps customers by offering more effective pricing and the capacity to execute larger deals with less influence on the market.
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The ramifications of reduced spreads for Bitcoin are numerous. Increased market participation is indicative of improved liquidity, which may draw in more institutional and individual investors. This is especially important since the creation of a Bitcoin ETF provides a regulated and easily accessible way to invest in Bitcoin without having to deal with the hassles of holding the cryptocurrency directly.
Bitcoin’s price movement has shown more volatility since the ETF’s approval, which is typical as markets respond to fresh liquidity and investor interest. Examining the Bitcoin price chart, it appears that the psychological threshold of $40,000, or local support levels, are where the commodity seems to firmly settle. In contrast, resistance is found close to the $43,000–$45,000 region, which has seen selling pressure on Bitcoin.
With the establishment of the ETF, customers can probably expect more stable trading conditions and the possibility of Bitcoin being a more widely accepted investment option. Examining the behaviour of Bitcoin since January 10, we have observed a test of stability near support levels, driven by Grayscale’s vigorous BTC selling.
