The depth of the bitcoin (BTC) and ethereum (ETH) market on all three exchanges Coinbase, Kraken, and Gemini has improved since the start of 2020, indicating that the two main crypto assets are maturing, according to the crypto analysis provider Parts metrics.
The conclusion that the BTC and ETH market is maturing has been called important by analysts, as it gives large financial institutions with more sophisticated trading and execution strategies a chance to trade assets with minimal slip costs.
“High liquidity on many exchanges means that a particular market order will have less impact on the going market price,” a report from Coin Metrics said. He added that greater liquidity also improves the price discovery process, making market manipulation “more expensive and unlikely”.
Regarding bitcoin in particular, Coin Metrics said market depth “has generally improved” on all three exchanges examined. He added that the quality of the market depth has also improved, using as an example that the top 100 offers and requests on Coinbase “all fall within 0.2% of the best bid / ask.” .
Likewise, the report states that ETH also had a “transformative year 2021,” with order book data indicating that the market for the second most valuable crypto-asset is maturing.
“On Coinbase and Kraken, there is now generally enough ETH on either side of the market available to absorb a $ 1 million market order with less than 0.2% slippage,” the report said of the. amount of liquidity in the ETH market.
Finally, the report also pointed out that liquidity on stock exchanges is something that regulators look for when assessing the risk of market manipulation and the overall maturity of a market.
“As regulators continue to weigh exchange-traded funds [ETFs] and other crypto investment products, the depth of the order book on crypto-asset exchanges is critical to pay attention, ”Coin Metrics concluded.
The idea that the BTC market, in particular, is maturing may turn out to be exactly what regulators need, as the decision date on a number of ETFs in the United States appears to be approaching.
Assignment Bloomberg ETF analyst Eric Balchunas on Twitter on Wednesday noted that ETF issuer Ark Invest just filed a new bitcoin-backed ETF with ticker ARKA, which Balchunas interpreted as a sign that the United States Security and Trade Commission (SEC) will soon approve an ETF.
ALSO remarkable, this is the second filing in a row not to contain the word ‘Canada’. It ONLY invests in futures, no BTCC or GBTC options, ”added Balchunas, adding that rumor has it that the SEC wants an ETF purely based on futures.
Meanwhile, the same analyst also shared yesterday that Valkyrie, another of the issuers who applied for a bitcoin futures ETF, updated its prospectus to add a ticker code, which it said “usually only occurs when the lined up ducks are ready to launch.”
“I can’t say it’s agreement type proof, but it’s a good sign for IMO,” the ETF analyst added.
During this time, Bitwise asset management has applied for a BTC ETF physically backed by NYSE Arca.
“It would contain actual BTC, * not * futures. There is already a separate Bitwise ETF deposit based on BTC futures. But actual BTC is better. And we think it’s finally possible.” Bitwise CIO Matt Hougan said sharing their 100+ analytics pages.
At 3:47 p.m. UTC, BTC was trading at $ 57,537 and was up almost 3% in one day and 4% in a week. ETH hit $ 3,800 and increased 9% in one day and almost 6% in one week.
– Experts disagree on Bitcoin ETF’s outlook in 2021 as deadline approaches
– Bitcoin decouples from stocks as bullish sentiment returns
– SEC approves Bitcoin linked ETF as market waits for ‘real’ BTC ETF
– Ethereum takes a hiatus, as Bitcoin in the spotlight