Why Bitcoin Price Doesn’t Fluctuate on Weekends Anymore? The Decline of Weekend Rallies Explained by Kaiko
The volatility of Bitcoin (BTC), the world’s largest cryptocurrency, has shown an interesting trend of stabilization over the weekends.
According to cryptocurrency research firm Kaiko, the proportion of Bitcoin traded on weekends has reached an all-time low of 16% this year.
This decline can be attributed to the introduction of spot Bitcoin ETFs, which have aligned Bitcoin trading periods with traditional stock exchanges’ schedules and subsequently reduced price volatility.
Unlike stocks, cryptocurrencies like Bitcoin can be traded at any time, including weekends. In the past, Bitcoin trading was notorious for its “Wild Weekends,” characterized by significant price swings. However, this phenomenon seems to be diminishing as the weekend trading volume of Bitcoin continues to decrease from its peak of 28% in 2019. The launch of Bitcoin ETFs is likely a major factor contributing to this change.
Bitcoin ETFs were launched in early 2024 after receiving approval from the U.S. Securities and Exchange Commission. They have since garnered significant investor interest, leading to a surge in Bitcoin’s price to a record high in March. Although some of those gains have been erased, the top cryptocurrency is still up by nearly 45% this year, currently hovering around $61,000.
Unlike most cryptocurrencies, Bitcoin ETFs follow the trading schedule of the traditional exchanges on which they are listed. As a result, they cannot be traded on weekends. Kaiko’s research shows that the proportion of Bitcoin traded between 15:00 and 16:00 on weekdays has increased from 4.5% to 6.7% in the fourth quarter of 2023. This period, known as the benchmark pegging window, is when ETF owners set the Bitcoin price used to calculate the ETF’s net asset value.
The decline in weekend transaction volume can also be attributed to the collapse of crypto-friendly banks Silicon Valley Bank and Signature Bank in March 2023, as noted by Kaiko. These banks’ 24/7 payment networks were previously used by market makers to buy and sell crypto in real time. Without access to these networks, market makers have less incentive to provide liquidity during low-volume weekends. Kaiko’s report suggests that this weekend/weekday gap is likely to persist.
Furthermore, the institutional adoption of cryptocurrencies through Bitcoin ETFs has contributed to significantly reduced price volatility, according to Kaiko’s report. When Bitcoin reached record highs in November 2021, volatility reached nearly 106%. However, after Bitcoin hit an all-time high of $73,798 in March due to optimism surrounding ETFs, volatility dropped to just 40%.
The trend of lower volatility, consistently below 50% since the beginning of 2023, indicates that Bitcoin is maturing as an asset. Kaiko’s report suggests that while it may be too early to determine if this is the new normal, changes in Bitcoin’s market structure over the past year could explain the relatively subdued price action.
*This article does not provide investment advice.
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