- A report from Kaiko research states that during the period of low volatility that followed the adoption of spot Bitcoin ETFs, several crucial measures for the blockchain have declined, including the weekend trading volume of Bitcoin, which is at an all-time low.
The reputation of Bitcoin, at least among the general public, is almost entirely associated with volatility. Though weekend trading activity for bitcoin has dropped to its lowest point in the history in 2024, it’s possible that the cryptocurrency’s crazy weekends are coming to an end.
This year, only 16% of bitcoin trading volume occurred on weekends, down from up to 28% in 2019. This information comes from a recent report by cryptocurrency research firm Kaiko.
A number of variables, including the introduction of spot Bitcoin ETFs, are identified in the paper as contributing to the fall. ETF trading only takes place throughout the week when the stock market is open, whereas cryptocurrency marketplaces are accessible 24/7.
When these products were first introduced in the fourth quarter of 2023, Kaiko analysts saw a rise in the amount of bitcoin moved in the benchmark fixing window, which is the final hour of market trading.
According to the report, Bitcoin purchases and sales for creations and redemptions must take place during the fixing window, which is from 3 to 4 p.m. New York time, in order for the price to closely match the benchmark.
Though the impact is only seen on weekdays, that window has emerged as the second most popular period for bitcoin trading since the introduction of spot Bitcoin ETFs.
On the other hand, weekend trading has been declining steadily since 2021, and it is presently at its lowest point in history. On weekdays, 6.6% of trading occurs during the benchmark window; on weekends, that proportion drops to slightly over 4%.
According to a Bloomberg study, the closure of Silicon Valley and Signature banks that support cryptocurrencies in March 2023 may be another reason for the decreased volatility.
Since the shutdown of the networks that both banks ran around-the-clock and enabled market makers to place sizable buy and sell orders for cryptocurrency, market makers have been less willing to supply liquidity in low-volume environments.
Shorter term, investors have been watching inflation measurements closely, expecting the Federal Reserve to eventually decrease rates, which has resulted in a stagnation of Bitcoin’s price.
Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
