Most people love Fridays as the next two days will be work and stress-free. Who doesn’t? One can stay up late with friends or co-workers in a bar or just be at home, in your room, watching your favorite movie. But how about for crypto traders? Does cryptocurrency trade on weekends? Fortunately or unfortunately, active Bitcoin and other cryptocurrency traders cannot have that stress-free weekends. Saturday and Sundays could be just like an ordinary working day, or maybe busier days for them, as trading in cryptocurrencies continue until Saturdays and Sundays. In fact, weekends are considered the most crucial time for traders to buy and sell popular cryptocurrency. Based on a market report from a platform for accessing cryptocurrency data and insight (Santiment), Saturdays are the best days for Bitcoin in 2019, while Fridays being the worst.
Why Does Cryptocurrency Trade On Weekends
One of the differences between cryptocurrency trading to traditional trading is that it is open 24/7 on several exchanges worldwide. Although many see it as an advantage since there can be potential benefits of making profits at the traders’ convenience, it can also become challenging as trading on weekends means regular and constant monitoring of prices and earning or losing even on weekends. The 24/7 cryptocurrency trading can easily cause sleepless and busy Saturdays and Sundays for active crypto traders.
Bitcoins Trading Go Wild On Weekends
There are several reasons why Bitcoin might perform better on weekends. One of the reasons why does cryptocurrency trade on weekends is that the weekend records lower volume, which usually raises the chances of high volatility. Another reason is that traditional markets that facilitate Bitcoins, like the CME, are close on weekends. Thus, when they open, it causes a spike in volatility.
Based on records and data, some of Bitcoin’s biggest price exchange usually happens on the weekend. One example was when it peaked a little less than 20,000 US dollars, and it happened on a Saturday in December 2017. It also had a scale down when it went down to approximately 6,600 US dollars on the weekend of June 2018. According to data, around 80% of the weekends have had a minimum of around 3% move in both directions in BTC prices. More than 50% of the weekends have had about 5% or higher price move on weekends since December 2017. This was attributed to the hacking of the CoinRail, a cryptocurrency exchange from South Korea.
In 2019, Bitcoin had positive average performance for four days a week, with Saturdays being the best days, with more than 1% returns. Sundays and Thursdays have average returns of a little less than 0.50%, while Tuesdays have average returns of more than 0.60%. However, on Fridays, Bitcoin has its worst performance, with an average loss of around -0.90%. Wednesdays were also not that pleasant for Bitcoins as it is recorded to have an average loss of more than -0.30% and a mild loss on Mondays with around 0.05%.
Price Moves Accompanied By Low Volumes
One of the reasons why does cryptocurrency trade on weekends is because the price changes are significant in size on weekends, but the volume is lower. Mostly, the size of individual orders is usually substantial, with overall fewer orders. This means that Bitcoin whales, or the large holders of Bitcoins, are more active on weekends. One of the reasons is to amass to offload BTC in huge numbers and cash in the weekends causes price swings. Fewer active traders in the market make the market vulnerable to more volatile price action. There could be sudden pullbacks because of low Bitcoin trading volume on weekends. For example, on a Sunday in August, Bitcoin’s price dropped suddenly by more than 5% overnight. Then this causes a volume spike.
There are other systematic factors that are at play, aside from the activities of the large volume of participants. One of these factors is the mismatch in the standard operating hours of certain banks and cryptocurrency markets. In most cases, banks operate eight hours a day, from Monday to Friday. On the other hand, cryptocurrency trading goes on 24 hours a day, seven days a week. Typically, cryptocurrency exchanges and brokers charge a considerable amount for buying virtual coins using credit cards. Thus, individuals and firms prefer to use bank transfer transactions (ACH) or wire transfers to avoid certain card charges. And since there are many active crypto traders or market participants and firms who want to purchase or offload their Bitcoins over the weekend, they transfer cash with their linked bank accounts to crypto trading accounts on a Friday. Cash usually relies on trading and limited market liquidity, so active market participants and traders try to place trades at very high prices. This action can also contribute to big price moves as low liquidity often leads to widespread trading prices at any given point in any trading system. Learn more about crypto trading here!
The 24/7 trading in cryptocurrency comes with advantages and disadvantages. The good thing is that it allows active cryptocurrency traders to trade anytime due to its time flexibility. They do not have to worry about opening and closing times, like in traditional banks. However, the negative thing is that odd-hours activities can also cause significant losses. Now that you know the answer to the question, does cryptocurrency trade on weekends? Well, you will have to be more careful. There are several issues and problems in cryptocurrency trading because of the lack of regulations as well as no fundamental mechanisms for digital currency valuations. Also, there are risks of data or crypto wallet being hacked, stolen, or lost. And finally, traders have another reason to worry and think about: the weekend effect in cryptocurrency trading.