Analysts at Kaiko say bid-ask spreads on major U.S. exchanges like Coinbase and Kraken have led to tighter ETF approvals after spot sales, indicating enhanced market liquidity and depth.
Bitcoin (BTC) bid-ask spreads, which represent the difference between the highest bid price and lowest ask price, decreased significantly following approval, indicating improved market liquidity and deeper trading activity.
In a recent research report, analysts at Kaiko revealed that US-based cryptocurrency exchange Kraken saw the highest volatility in its spreads during the month of January, reaching a peak of 10 basis points on January 20. Likewise, spreads on Bitstamp and Coinbase also peaked between January and January. on January 8 and 13 at 6.7 and 1.7 basis points, respectively, before falling to less than one basis point in recent weeks.
Kaiko noted that this trend extends beyond the US and Bitcoin markets, where the average bid-ask spread for the more liquid Bitcoin and Ethereum (ETH) trading pairs has also declined across various cryptocurrency exchanges.
“Coinbase and Kraken saw the strongest declines while the decline was less pronounced in Binance and OKX, which already offer very low spreads.”
Sidewalk
Analysts say the approval of exchange-traded funds (ETFs) will eventually fuel a new wave of competition among exchanges, with Coinbase already announcing fee waivers for large traders, which is expected to lead to lower spreads.
As crypto.news previously reported, the US Securities and Exchange Commission (SEC) has given the green light to all applications for Bitcoin exchange-traded funds. However, Gary Gensler, who has maintained a critical stance on cryptocurrencies since leading the US financial regulator, stressed in a statement that the SEC “has not approved or endorsed Bitcoin,” despite approving spot ETFs.
