According to crypto research firm Kaiko, the percentage of Bitcoin traded over the weekend fell to an all-time low of 16% this year, reflecting significant changes in the cryptocurrency market.
The launch of Bitcoin ETFs marks a significant change. Unlike Bitcoin spot trading, which operates 24/7, Bitcoin ETFs follow the trading hours of traditional stock exchanges. This means they do not trade on weekends, contributing to the low volume of Bitcoin trading on those days.
Previously, Bitcoin was famous for its “wild weekends,” characterized by large price fluctuations on Saturday and Sunday. However, this phenomenon has declined as institutional investors, attracted to Bitcoin ETFs, often choose to trade on weekdays when markets are more stable and when ETFs determine prices (such as in the fixed time frame from 3:00 p.m. to 4:00 p.m. which has increased to 6.7% from 4.5% in the fourth quarter of 2023).
The launch of a Bitcoin ETF with approval from the U.S. Securities and Exchange Commission (SEC) in early 2024 has been a hit with investors, sending Bitcoin prices soaring to a record high in March. While some of those gains have been erased, the largest cryptocurrency is still up about 45% this year and is trading around $61,000.
Source: TradingView
Institutional adoption of Bitcoin ETFs has not only changed trading patterns but also helped reduce Bitcoin price volatility. When Bitcoin last hit a record high in November 2021, volatility rose to nearly 106%. After Bitcoin hit an all-time high of $73,798 in March amid ETF optimism, volatility was just 40%. This is seen as a sign of maturity for the asset class, in contrast to Bitcoin’s past periods of high volatility, especially during its 2021 price peaks.
The closure of crypto-friendly banks like Silicon Valley Bank and Signature Bank further reduced weekend trading. Their 24/7 settlement systems are critical to real-time trading, and their absence reduces liquidity and incentives for liquidity providers to operate on weekends.
Despite spikes in volatility, the overall decline in volatility, with stability consistently below 50% since the start of 2023 suggests that Bitcoin is becoming a more mature asset. This decrease is attributed to institutional participation, regulatory developments such as the approval of ETFs, and changes in market structure.
However, the long-term implications of these changes, including possible changes in market dynamics and investment behavior, remain to be better understood.
“While it is too early to call this the new normal, changes in Bitcoin’s market structure over the past year may help explain why price action has been relatively ‘boring,’” Kiko concluded. essay.
Itadori
According to Yahoo Finance
