Bid-ask spreads on major US exchanges like Coinbase and Kraken have reduced post-spot ETF approvals, indicating greater market liquidity and depth, Kaiko analysts say.
The bid-ask spreads for bitcoin (btc), which represent the difference between the highest bid price and the lowest ask price, have decreased significantly following approval, indicating an improvement in market liquidity and deeper commercial activity.
In a recent research report, Kaiko analysts revealed that US-based cryptocurrency exchange Kraken experienced the highest volatility in spreads during January, reaching a high of 10 basis points on January 20. Similarly, spreads on Bitstamp and Coinbase also peaked between January 20 and January 20. January 8 and 13 at 6.7 and 1.7 basis points respectively, before plummeting to less than 1 basis point in recent weeks.
<img decoding="async" width="1024" height="603" src="https://crypto.news/app/uploads/2024/02/hpidsuhfusd-1024×603.png” alt=”bitcoin and ethereum Price Differences Narrow on US crypto Exchanges Following Spot ETF Approval – 1″/>
Kaiko noted that the trend extends beyond the US and bitcoin markets, as the average bid-ask spread for the most liquid btc and ethereum (eth) trading pairs has also decreased on several crypto exchanges.
“Coinbase and Kraken saw the sharpest decline, while the decline was less pronounced on Binance and OKX, which already offer very low spreads.”
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Analysts say the approval of spot exchange-traded funds (ETFs) will eventually fuel a new wave of competition among exchanges, as Coinbase has already announced fee waivers for large traders, which is expected to further reduce the differentials.
As previously reported by crypto.news, the US Securities and Exchange Commission (SEC) has given the green light to all bitcoin spot ETF applications. However, Gary Gensler, who has maintained a critical stance on cryptocurrencies since he took over the leadership of the US financial regulator, reiterated in a bitcoin-011023″ target=”_blank” rel=”noopener”>statement that the SEC “did not approve or endorse bitcoin,” despite approving spot ETFs.
