New bitcoin ETFs are boosting crypto exchanges. Here’s how.

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Welcome back to Distributed Ledger. This is Frances Yue, crypto and markets reporter at MarketWatch.

As investor interest in crypto assets increased with the arrival last month of new bitcoin ETFs, the total spot trading volume on centralized crypto exchanges rose 4.5% to $1.4 trillion in January, the fourth consecutive month of increase, according to crypto data provider CCData. It was also the highest monthly spot trading volume of crypto seen since June 2022. 

I caught up with Bobby Zagotta, chief executive at crypto exchange Bitstamp USA, to chat about what he has observed. 

Find me on X at @FrancesYue_ to share any thoughts on crypto or the newsletter.

Increased interests

Bitstamp saw an especially sharp increase of crypto trading volume and the number of new institutional and individual users in the fourth quarter last year, as investors anticipated the arrival of the new ETFs, Zagotta said in a phone interview. The exchange has seen continued strength in volume and the number of onboarding users in January, according to Zagotta. 

While Bitstamp doesn’t list any of the bitcoin ETFs, it serves as a liquidity provider for the products, noted Zagotta.

Crypto exchanges provide liquidity not by offering trading in shares of ETFs, but by supporting ETF sponsors and other institutional players in the creation or redemption of ETF shares, which are underpinned by bitcoin. Bond ETFs work in a similar way.

The launch of bitcoin ETFs has brought in additional buying and selling of the crypto, boosting the volume on crypto exchanges, Zagotta said.

Zagotta said he expects to see the full impact of bitcoin ETFs gradually unfold in the next six to 24 months, with increasing institutional participation. 

Larry David regrets starring in FTX ad 

Comedian Larry David said he was an “idiot” for starring in a crypto ad by the now bankrupt crypto exchange FTX in 2022. 

In the ad that debuted during the 2022 Super Bowl featuring FTX, David touted how he is “never wrong” about a series of iconic inventions throughout history.

During a red carpet event this week for the 12th season of his HBO show “Curb Your Enthusiasm,” David said he was told by a bunch of his friends that it was a good idea to do a crypto ad back then, and “like an idiot, I did it.” David’s agent couldn’t be reached by press time after several emails and phone calls. It’s unclear if David has any plans to return the fees he earned from the FTX ad.

FTX filed for bankruptcy in November 2022, and its co-founder Sam Bankman-Fried, was found guilty on seven charges of fraud and conspiracy in November 2023. 

MarketWatch’s Weston Blasi wrote more about it here.  

ETH versus BTC 

“While cryptocurrencies could experience some further consolidation in March before bottoming again, it’s becoming increasingly more favorable to overweight Ethereum vs. Bitcoin,” as investors now look forward to a potential approval of ether ETFs in the coming months, according to Mark Newton, head of technical strategy at Fundstrat. 

The ether to bitcoin price ratio has risen to multi-day highs for the second time in the last two weeks, Newton wrote in a Tuesday note. The ratio “appears to be carving out a bottoming process which should lead higher in the weeks to come,” Newton said.

Crypto in a snap

Bitcoin edged up 0.5% in the past seven days and ether gained 3.5% during the same period, according to CoinDesk data.

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