Bitcoin Trading Volume Shows Significant Weekend Decline Amidst ETF Launch and Lower Volatility

• Bitcoin trading volume on weekends has dropped significantly since 2019.
• Factors such as the introduction of spot Bitcoin ETFs and the closure of key crypto-friendly banks have contributed to this decline.
• According to Kaiko, the final hour of trading, known as the benchmark fixing window, has become increasingly pivotal for BTC trades.

Discover the impact of changing trading dynamics on Bitcoin’s weekend volume and how recent developments are shaping the crypto market.

Bitcoin’s Declining Weekend Trading Volume

In 2019, Bitcoin’s weekend trading volume accounted for 28% of its total trade volume. However, this figure dropped to a mere 16% last year, as highlighted in a new report by cryptocurrency research firm Kaiko. The introduction of spot Bitcoin ETFs has been identified as a key influencer in this trend. Despite the global operability of crypto markets, ETF trading is restricted to regular market hours, thereby reducing weekend activity.

The Influence of Spot Bitcoin ETFs

The release of spot Bitcoin ETFs in the last quarter of 2023 has significantly altered trading patterns. As Kaiko researchers noted, BTC trading activity spikes during the benchmark fixing window, which is the final hour of market operations, specifically from 3 PM to 4 PM New York time. Since the advent of these ETFs, this window has become the second most popular time for BTC trading, although this effect is confined to weekdays.

Weekend Trading Trends

Since 2021, weekend trading has been steadily declining and is currently at historic lows. While 6.6% of BTC trades occur during the benchmark fixing window on weekdays, this figure drops to just over 4% on weekends. This trend underscores the impact of traditional market constraints on crypto trading activities even in a market that operates round the clock globally.

Other Factors Contributing to Lower Volatility

Besides ETF introduction, the shuttering of crypto-friendly Signature and Silicon Valley banks in March 2023 also plays a role in reduced market volatility. These banks previously facilitated significant crypto transactions through their 24/7 networks. Their closure has led to lower liquidity, especially during low-volume periods, as market makers are now less inclined to offer substantial buy and sell orders.

The Long-term Outlook

As markets adapt to these changes, the long-term impacts on Bitcoin and other cryptocurrencies remain to be seen. Analysts suggest keeping an eye on trading patterns and liquidity, especially as the crypto market continues to evolve with new financial products and regulatory developments. Investors and traders should stay informed and adjust their strategies accordingly to navigate these shifting dynamics.

Conclusion

The significant reduction in Bitcoin’s weekend trading volume highlights the evolving nature of the crypto market. Influenced by the introduction of spot Bitcoin ETFs and the closure of major crypto-friendly banks, trading dynamics are shifting, particularly around the benchmark fixing window. As these changes continue to unfold, understanding these patterns will be crucial for those involved in the crypto space.