CoinUnited.io APP
Trade BTC with up to 2,000x Leverage
(260K)
Resurgent Bitcoin Brings Back Wild Weekends Phenomenon
Table of Contents
facebook
twitter
whatapp
telegram
linkedin
email
copy
HomeArticles

Resurgent Bitcoin Brings Back Wild Weekends Phenomenon

Resurgent Bitcoin Brings Back Wild Weekends Phenomenon

By CoinUnited

days icon6 Feb 2023
Bitcoin has returned to making significant changes on weekends, a trend that has become a fascinating feature of the cryptocurrency market, despite the market's uptrend this year.

Take last Sunday, for example, when it climbed 3.4%, the same percentage as the Saturday before. Plus, the previous Saturday saw a 5.5% increase in the value of the coin.

It's hardly surprising that Bitcoin experiences big swings. However, unlike conventional assets, which typically trade Monday through Friday on regulated exchanges, the token, like all other cryptocurrencies, trades around the clock, every day of the week. And this phenomenon has already been observed in the crypto markets, with Bitcoin spiking higher — or recording significant down days — when other assets are resting.

Noelle Acheson, author of the "Crypto Is Macro Now" newsletter, posits that the weak liquidity over the weekend may be the most convincing hypothesis for the huge price movements on large orders. She claims that traders and investors have been sitting on the sidelines while hodlers have been hodling, which has resulted in less liquidity for Bitcoin recently.

Acheson noted that "volatility has risen up since the beginning of the year — still not at 'normal' levels, but getting there."

As investors look ahead to the remainder of 2023, when they anticipate the Federal Reserve to reduce its aggressive monetary policy stance, crypto tokens have soared at the start of the year with other risky assets like equities. Bitcoin is up around 40%, taking its decline from its all-time high in November 2021 to about 60%. Similar gains have been seen by Ether, the second largest cryptocurrency by market value.

However, investors have generally stayed away from the digital-assets market over the course of the past year due to the volatility, which led to the failure of several once-promising businesses, such as the trading platform FTX. Even though there are hundreds of cryptocurrency exchanges throughout the world (650, according to CoinGecko), 24-hour trade volumes have recently been hovering around $100 billion, down from over $200 billion in November of 2021. Therefore, any price changes during the weekend may be amplified by the thinner volumes.

Even today, no one can say for sure what causes cryptocurrency values to spike on the weekends. The "overnight impact," a similar phenomena observed in the stock market.

According to Kara Murphy, chief investment officer at Kestra Investment Management, "companies release a lot of information after the markets close because they want people to have time to digest it — and by the time you come in the next morning, you have a chance to say, OK what's the impact of that news." And part of it may be true in the crypto world, where some people may wait to release information until Friday night so that you have the weekend to process it. There is less reliance on institutional purchasing in crypto compared to traditional markets, according to Chris Gaffney, president of international markets at TIAA Bank who runs a currencies desk.

For him, "it's more of the individuals," he explained in an interview. It's hardly surprising that Bitcoin experiences big swings. However, unlike conventional assets, which typically trade Monday through Friday on regulated exchanges, the token, like all other cryptocurrencies, trades around the clock, every day of the week. And this phenomenon has already been observed in the crypto markets, with Bitcoin spiking higher — or recording significant down days — when other assets are resting.

Noelle Acheson, author of the "Crypto Is Macro Now" newsletter, posits that the weak liquidity over the weekend may be the most convincing hypothesis for the huge price movements on large orders. She claims that traders and investors have been sitting on the sidelines while hodlers have been hodling, which has resulted in less liquidity for Bitcoin recently.

Acheson noted that "volatility has risen up since the beginning of the year — still not at 'normal' levels, but getting there."

As investors look ahead to the remainder of 2023, when they anticipate the Federal Reserve to reduce its aggressive monetary policy stance, crypto tokens have soared at the start of the year with other risky assets like equities. Bitcoin is up around 40%, taking its decline from its all-time high in November 2021 to about 60%. Similar gains have been seen by Ether, the second largest cryptocurrency by market value.

However, investors have generally stayed away from the digital-assets market over the course of the past year due to the volatility, which led to the failure of several once-promising businesses, such as the trading platform FTX. Even though there are hundreds of cryptocurrency exchanges throughout the world (650, according to CoinGecko), 24-hour trade volumes have recently been hovering around $100 billion, down from over $200 billion in November of 2021. Therefore, any price changes during the weekend may be amplified by the thinner volumes.

Even today, no one can say for sure what causes cryptocurrency values to spike on the weekends. The "overnight impact," a similar phenomena observed in the stock market.

Kara Murphy, chief investment officer at Kestra Investment Management, said, "Companies release a lot of information after the markets close because they want people to have time to digest it — and by the time you come in the next morning, you have a chance to say, OK what's the impact of that news." And part of it may be true in the crypto world, where some people may wait to release information until Friday night so that you have the weekend to process it. There is less reliance on institutional purchasing in crypto compared to traditional markets, according to Chris Gaffney, president of international markets at TIAA Bank who runs a currencies desk.

For him, "it's more of the individuals," he explained in an interview.