Do Exchange‑Traded Products Improve Bitcoin Trading?

Ken Armstrong, Leslie Conner Warren and Asani Sarkar

No 20240528, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: Spot bitcoin exchange-traded products (ETPs) began trading in the U.S. on January 11, 2024. For investors, these ETPs purport improved liquidity and price efficiency, and more convenient access to bitcoin trading compared to other means of trading bitcoin in spot markets. Proponents also cite bitcoin holdings as a portfolio diversification opportunity due to historically low correlation with traditional financial securities. Others argue that bitcoin remains a speculative asset and that ETPs increase its interconnections with the traditional financial system. In this post, we examine the initial performance, trading costs, and price efficiency of spot bitcoin ETPs in the U.S.

Keywords: bitcoin; exchange-traded products (ETPs) (search for similar items in EconPapers)
JEL-codes: G00 G14 G23 (search for similar items in EconPapers)
Date: 2024-05-28
New Economics Papers: this item is included in nep-ban, nep-ifn, nep-mon, nep-mst and nep-pay
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