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‘Boring’ Bitcoin Sends Weekend Trading Volume to All-Time Lows
(Bloomberg) — The percentage 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 decline comes on the heels of the launch of spot Bitcoin exchange-traded funds, which appear to have shifted the times when Bitcoin trades to more closely align with the schedule of traditional stock exchanges and reduced its price volatility.
One of the notable features of cryptocurrencies is that, unlike stocks, they are 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 would experience large price fluctuations.
But this phenomenon appears to be cooling off as Bitcoin’s weekend trading volume has continued to decline from its 28% high in 2019. The launch of Bitcoin ETFs is likely a major reason.
According to Dessislava Aubert, senior analyst at Kaiko, the decline in weekend trading is a “year-long trend, but one that has been exacerbated by ETFs.”
Bitcoin ETFs launched with the approval of the U.S. Securities and Exchange Commission in early 2024 and have since been a hit with investors, causing the price of Bitcoin to skyrocket to an all-time high in March. While some of those gains have been erased, the largest cryptocurrency is still up about 45% this year, to around $61,000.
Unlike most cryptocurrency tokens that can be traded at any time on exchanges like Binance, Bitcoin ETFs follow the schedule of the traditional exchange they trade on, meaning no weekend trading.
The share of Bitcoin traded on weekdays between 3 p.m. and 4 p.m. has risen 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.
According to Kaiko, the collapse of crypto-friendly banks Silicon Valley Bank and Signature Bank in March 2023 is also contributing to the decline in weekend trading volume.
This is because market makers can no longer use banks’ 24/7 payment networks to buy and sell cryptocurrencies in real time.
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“The weekend-weekday divide is likely to persist as market makers, who derive their revenue from large volumes of trades that earn on the bid-ask spread, have less incentive to provide liquidity in a low-volume environment,” Kaiko’s report said.
According to another report by Kaiko, institutional adoption of cryptocurrencies via Bitcoin ETFs has also led to a dramatic reduction in price volatility.
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%.
According to Kaiko, the trend of 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.
“While it is too early to say 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 ‘boring,’” the report says.
–With the collaboration of Vildana Hajric.
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