Crypto Market Research Firm Observes Declining Weekend Trading Activity for Bitcoin
An analysis by blockchain market data provider Kaiko has revealed a significant decline in weekend trading activity for Bitcoin. According to the research, only 13% of all Bitcoin transactions so far this year have taken place on weekends, compared to 17% last year and 24% in 2018. The study also found that weekend trading volumes on offshore exchanges dropped from 27% to 15%, while onshore markets saw a decrease from 21% to 11%. These figures suggest that retail investors have traditionally been the main participants in weekend crypto trading.
Weekend Downturns Impact Crypto-Fiat Trading
Kaiko’s analysis further highlights the impact of weekend downturns on crypto-fiat trading. The volume of BTC-USD weekend trades hit an all-time low of 2 million BTC last year, while Bitcoin-Tether (USDT) trades reached 11 million BTC during the same period. Additionally, Kaiko observed that Coinbase had poorer weekend liquidity compared to Binance, as indicated by the bid-ask spread of Bitcoin. A wider bid-ask spread signifies lower liquidity in an exchange.
No Weekend Transactions for Approved Bitcoin ETFs
Interestingly, Kaiko’s data also revealed that none of the transactions related to the ten recently approved spot Bitcoin exchange-traded funds (ETFs) occurred on weekends. This observation aligns with the current state of Bitcoin, which has seen a surge in institutional investment following the approval of spot Bitcoin ETF trading by the US Securities and Exchange Commission (SEC). The influx of institutional money has led to Bitcoin adopting more regular trading hours.
Bitcoin ETFs Pump Trading
The most significant price-driving narrative in 2024 has been the approval of Bitcoin ETFs. With Bitcoin now trading at over $59k, it has reached a level not seen since November 2021. This surge comes after the historic collapse of UST, which caused widespread market turmoil and bankrupted multiple lenders and exchanges.
Prior to the ETF approvals, several asset managers, including ArkInvest and GrayScale, had faced rejections from the SEC for their spot Bitcoin ETF applications. However, with Chairman Gary Gensler leading the agency, the SEC has taken a more lenient approach towards the industry. Previously, the SEC had relied on a “regulation-by-enforcement” strategy, suing crypto companies for alleged violations instead of providing clear guidance on regulatory compliance.
The approval of ETFs came after a federal court ruled that the SEC’s rejection of Grayscale’s application to convert its Bitcoin Trust into an ETF in 2023 was “arbitrary and capricious.” Since then, ETFs have experienced significant inflows, with a combined $1.1 billion in inflows earlier this month. Market leader Blackrock’s ETF alone recorded $1.3 billion in inflows on a single day.
Hot Take: Institutional Investment Changes Bitcoin’s Trading Patterns
With the entrance of institutional investors through Bitcoin ETFs, the cryptocurrency market has experienced a shift in trading patterns. The decline in weekend trading activity can be attributed to these institutional players who typically adhere to traditional working hours. As Bitcoin continues to attract more institutional money, its trading behavior is expected to align with traditional financial markets.
Overall, Kaiko’s analysis provides valuable insights into the changing dynamics of Bitcoin trading and the impact of institutional investment on market behavior. The declining weekend trading activity indicates a shift towards more regulated and structured trading patterns in the cryptocurrency space.
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