‘Alameda Gap’ Keeps Bitcoin Volatile Even as ETFs Bolster Volume

A dearth of liquidity in the digital-asset market continues to roil Bitcoin, even with the first US exchange-traded funds to hold the cryptocurrency logging billions of dollars in trading volume since their debut.

The ability to easily or quickly buy and sell the digital currency hasn’t improved since the 10 funds began trading Jan. 11, traders say. Liquidity is especially important in a relatively new market such as crypto, where a single large trade can have an outsized impact on an asset price, raising the risk of manipulation.

“The emergence of spot Bitcoin ETFs, while very positive for overall market ...