According to Bloomberg, data from cryptocurrency research firm Kaiko shows that the proportion of Bitcoin (Bitcoin) trading on weekends has dropped to a record low of 16% this year. This decline occurred in the Bitcoin Spot Exchange Traded Fund (ETF) Once launched, this appears to bring the periods during which Bitcoin is traded more in line with traditional stock exchange schedules and reduce Bitcoin price volatility.
In the past, Bitcoin trading was known for its "wild weekends," when the digital currency saw large price swings, but this phenomenon appears to be cooling down. Bitcoin’s weekend trading volume has continued to decline from a high of 28% in 2019, and the launch of a Bitcoin ETF may be a big reason why.
Source: Kaiko
The decline in weekend trading volume is a "multi-year trend that has been exacerbated by ETFs," according to Kaiko senior analyst Dessislava Aubert. The U.S. Bitcoin spot ETF was approved in January 2024 and has since become a hit with investors, while Bitcoin prices surged to an all-time high of around $73,800 in March.
Kaiko said the proportion of Bitcoin traded between 3 and 4 p.m. ET on weekdays increased to 6.7% from 4.5% in the fourth quarter of 2023. This period of time is known as the base pricing window, during which the owner of the ETF determines the price of Bitcoin, which is then used to calculate the ETF's NAV.
According to Kaiko, the collapse of crypto-friendly banks Silicon Valley Bank and Signature Bank also contributed to the decline in weekend trading volumes, as market makers can no longer use the banks’ round-the-clock payment networks to buy and sell cryptocurrencies instantly. Kaiko’s report states:
“The weekend/weekday trading gap is likely to persist as market makers, whose revenue comes from high-volume trades earning bid-ask spreads, will have fewer incentives to provide liquidity in a low-volume environment.”
The adoption of the ETF also caused Bitcoin’s volatility to decrease
Institutional adoption of cryptocurrencies through Bitcoin ETFs has also led to a significant reduction in Bitcoin price volatility, according to a separate report from Kaiko.
When Bitcoin hit its then-all-time high in November 2021, volatility surged to nearly 106%. But when Bitcoin hit its all-time high in March this year, volatility only reached 40%.
Source: Kaiko
According to Kaiko, the trend of lower volatility, and the fact that volatility has remained below 50% since the beginning of 2023, shows that Bitcoin is becoming a more mature asset. Its report states:
“While it’s too early to say this is the new normal, changes in Bitcoin’s market structure over the past year may help explain why the price action has been relatively boring.”
This article Kaiko: Bitcoin trading ratio fell to historic low over weekend, possibly due to spot ETF launch , appeared first on Zombit.
