Major Market-Makers in Talks to Provide Liquidity to BlackRock’s Bitcoin ETF If Approved – Here’s Why That Matters for the BTC Price
Some of the global financial industry’s largest market-makers might jump in to provide liquidity for BlackRock if the firm’s spot Bitcoin Exchange Traded Fund (ETF) application is approved by the US Securities and Exchange Commission (SEC), reported CoinDesk on Tuesday citing a personal familiar with the matter.
According to the source, Hudson River Trading, Jane Street and Virtu Financial have help talks with BlackRock regarding taking up a market-making role.
BlackRock applied to set up a spot Bitcoin ETF back in June.
Dozens of other major asset managers quickly followed with their own applications, boosting risk appetite in the Bitcoin market at the time amid optimism about renewed institutional interest in the world’s largest cryptocurrency by market capitalization.
The fact that major market-makers are looking to step into the Bitcoin market could mark an important shift for trading conditions.
Crypto exchange data firm Kaiko has reported deteriorating liquidity conditions for Bitcoin consistently over the past year, with Bloomberg reporting back in May that firms like Jane Street and Jump crypto had curtailed market-making activities amid regulatory uncertainty relating to major US crypto exchanges.
Poor liquidity conditions mean that smaller sell/buy orders are able to have a larger impact on the BTC price, potentially leading to higher volatility.
Worsening liquidity is also a sign of an unhealthy market and often come as an asset is experiencing a major downturn, which up until late 2023 Bitcoin was.
The US institutional adoption narrative has been a major tailwind for Bitcoin since dozens of spot Bitcoin ETF applications from major Wall Street firms were filed in June, ensuring that short-term market dips have
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