Bitcoin ETF approval rumors, particularly in 2025, have significantly boosted market liquidity by attracting institutional capital, as seen with $37.9 billion in inflows to spot Bitcoin ETFs like BlackRock’s IBIT since January 2024. These rumors fuel speculative trading, with Bitcoin futures open interest rising 12,000 BTC and options interest up 14,000 BTC in early 2025, enhancing market depth. Liquidity improves as authorized participants (e.g., Goldman Sachs) facilitate ETF share creation/redemption, narrowing bid-ask spreads. Investors should adopt a dollar-cost averaging strategy, allocating 1–3% of portfolios to Bitcoin ETFs to capture upside while mitigating volatility risks (75% standard deviation). Rebalancing quarterly and monitoring ETF inflows (e.g., $300M/day in May 2025) via platforms like Farside Investors can help time entries during liquidity surges. However, investors must beware of “buy the rumor, sell the news” pullbacks, as seen post-January 2024 approvals.