Understand the drops in currencies during the late evening, or on the weekend.
It is relatively common for cryptocurrencies to show greater volatility and even drops during the weekends, including from Sunday to Monday. This is due to a few specific factors:
1. Low Trading Volume:
During the weekends, trading volume usually decreases, as many institutional investors are out of the market. This can lead to greater volatility, as smaller orders can have a greater impact on prices.
2. Lack of Relevant News:
Important events and announcements from major companies or governments are usually made during the week. The lack of this information on the weekends can lead to uncertainty and profit-taking.
3. Profit-Taking:
Many traders and investors close positions before the weekend to avoid risks associated with lower liquidity and greater volatility during these periods.
4. Manipulator Actions: Due to lower volume, whales (large investors) or market manipulators can act to influence prices more easily. 5. Correlation with Traditional Markets: Although cryptocurrencies operate 24/7, traditional markets (stocks, commodities) are closed on the weekend. This can cause a lack of direction or an early correction based on the expectation of the traditional market opening.