How Has Bitcoin Trading Changed with the Introduction of ETFs?

The percentage of Bitcoin traded during weekends has dropped significantly,
reaching an all-time low of 16% of total trading volume this year,
according to cryptocurrency research firm Kaiko.

Topic

Impact of ETFs on Trading Periods

24/7 Trading

Continuing Downtrend

Bitcoin ETFs

Impact of Bank Collapses

Decreased Price Volatility

Relative Stability of Bitcoin

Impact of ETFs on Trading Periods

This decline follows the launch of Bitcoin exchange-traded funds (ETFs),
which appear to have shifted Bitcoin trading periods to align more closely
with traditional stock market hours, reducing price volatility.

24/7 Trading

Cryptocurrencies, unlike stocks, can be traded 24/7, including Saturdays and Sundays.
In the past, Bitcoin was notorious for its “wild weekends,” characterized by severe price fluctuations.
However, this phenomenon has been diminishing since weekend trading peaked at 28% in 2019.
The introduction of Bitcoin ETFs is believed to be a significant factor in this decline.

Continuing Downtrend

Kaiko’s chief analyst, Dessislava Aubert, noted that the reduction in weekend trading has been a “long-standing trend, exacerbated by the ETFs.” Bitcoin ETFs were approved by the U.S. Securities and Exchange Commission (SEC)
at the beginning of 2024 and have seen strong investor interest,
pushing Bitcoin’s price to a record high in March. Despite some pullback,
the largest cryptocurrency’s price remains up about 45% this year, hovering around $61,000.

Bitcoin ETFs

Unlike most cryptocurrencies that can be traded anytime on exchanges like Binance,
Bitcoin ETFs follow the trading hours of the traditional stock exchange they are listed on,
meaning no weekend trading.
The proportion of Bitcoin traded on weekdays between 3 and 4 PM has increased to 6.7%,
up from 4.5% in Q4 2023, according to Kaiko.
This period is known as the “fixing window,”
during which ETF managers determine Bitcoin’s price to calculate the net asset value of these funds.

Impact of Bank Collapses

Kaiko also notes that the collapse of banks dealing with digital currencies,
such as Silicon Valley Bank and Signature Bank in March 2023, contributed to the decline in weekend trading volumes. Market makers can no longer use these banks’ 24/7 payment networks to buy and sell cryptocurrencies in real-time.

Decreased Price Volatility

Increased institutional adoption of cryptocurrencies through Bitcoin ETFs has led
to a significant drop in price volatility, according to another Kaiko report.
When Bitcoin last reached record levels in November 2021, volatility soared to nearly 106%.
In March, as Bitcoin hit an all-time high of $73,798 amid optimism about ETFs, volatility was only 40%.

Relative Stability of Bitcoin

The downward trend in volatility, remaining below 50% since the beginning of 2023,
indicates that Bitcoin has become a more established asset, according to Kaiko.
While it is too early to declare this the new normal,
changes in Bitcoin’s market structure over the past year may help explain
why its price movements have been relatively “boring.”

How Has Bitcoin Trading Changed with the Introduction of ETFs?

How Has Bitcoin Trading Changed with the Introduction of ETFs?

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