Bitcoin
‘Boring’ Bitcoin Sends Weekend Trading Volume to All-Time Lows
(Bloomberg) — The proportion of Bitcoin traded on weekends has fallen to an all-time low of 16% this year, according to cryptocurrency research firm Kaiko.
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The drop comes following 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 calendar of traditional equity exchanges and reduced its price volatility.
One of the notable features of crypto is that, unlike stocks, it is traded at all hours of the day and even on Saturdays and Sundays. In the past, Bitcoin trading has gained notoriety for its “wild weekends,” where the digital currency experiences wild 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 the price of Bitcoin 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 business days between 3 p.m. and 4 p.m. 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 lower 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 gap between weekend and weekdays will likely persist as market makers, who derive their revenue from large amounts of trades that generate the bid-ask spread, are less incentivized to provide liquidity in a low-volume environment.” , the Kaiko report states.
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Institutional adoption of crypto through Bitcoin ETFs has also led to drastically lower price volatility, according to another report by Kaiko.
When Bitcoin last hit record highs in November 2021, volatility rose to nearly 106%. After Bitcoin reached an all-time high of $73,798 in March amid optimism regarding ETFs, volatility was just 40%.
The trend toward lower volatility and the fact that it has remained below 50% since the beginning of 2023 indicate that Bitcoin is becoming a more mature asset, according to Kaiko.
“While it is too early to suggest that this is the new normal, changes in Bitcoin’s market structure over the past year may help explain why price action has been relatively ‘dull,’” the report states.
–With assistance from Vildana Hajric.
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