Following the approval of U.S.-based spot bitcoin (BTC) exchange-traded funds (ETFs) in January, the cryptocurrency market is witnessing a significant impact on both prices and order book liquidity.

Notable Increase in Market Depth

BTC: Aggregated 2% market depth (Kaiko) (Kaiko)

Recent data from Paris-based Kaiko reveals that Bitcoin’s order book liquidity has reached its highest levels since October. The combined value of buy and sell orders within 2% of the market price surged to $539 million on Tuesday, marking a 30% increase since the introduction of spot ETFs on January 11.

Liquidity and Slippage Dynamics

Market depth, reflecting the combined value of buy and sell orders within 2% of the market price, is a crucial indicator of liquidity. The surge in market depth enhances the ease of trading large quantities at stable prices, thereby reducing slippage – the difference between quoted and executed trade prices.

The share of U.S. exchanges has improved sharply since October. (Kaiko) (Kaiko)

U.S.-Based Exchanges Lead the Way

Kaiko‘s data highlights that U.S.-based exchanges have played a pivotal role in the global bitcoin market’s increased depth. The share of U.S.-based exchanges in the global 2% market depth has surged from 14.3% to 48%, underscoring the impact of spot ETF expectations since October.

While the surge in market depth is promising, it still falls short of pre-collapse levels witnessed in November 2022. Before the collapse of FTX and Alameda Research, market depth exceeded $800 million, indicating potential for further growth and stabilization in the bitcoin market.