Bitcoin
‘Boring’ Bitcoin Sends Weekend Trading Volume to All-Time Lows
(Bloomberg) — The proportion of Bitcoin traded on weekends has fallen to a record low of 16% this year, according to cryptocurrency research firm Kaiko.
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The drop comes in the wake of the launch of spot Bitcoin exchange-traded funds, which appears to have changed the periods in which Bitcoin is traded to be more in line with the schedule of traditional exchanges and reduced its price volatility.
One of the notable features of cryptocurrency is that, unlike stocks, it is traded during all hours of the day and even on Saturdays and Sundays. In the past, Bitcoin trading gained notoriety for its “Wild Weekends,” where the digital currency experienced large price fluctuations.
But this phenomenon appears to be cooling down, as weekend Bitcoin trading volume has continued to decline from its high of 28% in 2019. The launch of Bitcoin ETFs is likely a big reason why.
The decline in weekend trading is a “trend that has been going on for years but has been exacerbated by ETFs,” according to Dessislava Aubert, senior analyst at Kaiko.
Bitcoin ETFs launched with the approval of the U.S. Securities and Exchange Commission in early 2024 and have been a hit with investors ever since, sending Bitcoin’s price soaring to a record high in March. While some of those gains have been pared back, the largest cryptocurrency is still up about 45% this year to around $61,000.
Unlike most crypto tokens that can be traded at any time on exchanges like Binance, Bitcoin ETFs follow the schedule of the traditional stock exchange they trade on – meaning there is no trading on weekends.
The proportion of Bitcoin traded on weekdays between 3 p.m. and 4 p.m. has increased to 6.7% from 4.5% in the fourth quarter of 2023, Kaiko said. This is the period known as the benchmark-setting window, when ETF owners determine the price of Bitcoin and then use it to calculate the ETF’s net asset value.
The collapse of crypto-friendly banks Silicon Valley Bank and Signature Bank in March 2023 is also contributing to reduced weekend trading volumes, according to Kaiko.
This is because market makers can no longer use banks’ 24-hour payment networks to buy and sell cryptocurrencies in real-time.
“The weekend-weekday gap is likely to persist as market makers, who derive their revenue from large volumes of trades that generate the bid-ask spread, are less incentivized to provide liquidity in a low-volume environment,” the Kaiko report said.
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Institutional adoption of cryptocurrencies through Bitcoin ETFs has also led to drastically lower price volatility, according to another report from Kaiko.
When Bitcoin last hit record highs in November 2021, volatility spiked to nearly 106%. After Bitcoin hit an all-time high of $73,798 in March amid ETF optimism, volatility was just 40%.
The trend towards lower volatility, and the fact that it has remained below 50% since the beginning of 2023, indicates that Bitcoin is becoming a more mature asset, according to Kaiko.
“While it is too early to suggest this is the new normal, changes to Bitcoin’s market structure over the past year may help explain why price action has been relatively ‘boring,’” the report states.
–With assistance from Vildana Hajric.
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