Well, as with most things, the answer is yes and no. From January through June, Bitcoin returns have been .29% on weekdays and .17% on weekends. This is not really a crash, it is actually a pretty decent return. In fact, there is about a 50/50 chance that Bitcoin will be up on any given Monday morning this year, but, with the returns Bitcoin has historically returned, there is a drop off on the weekends.
So, what causes this? There are multiple theories and it is probably a combination of many of them.
Volume- In general there is less trading on weekends, even for crypto. When there is less overall volume moving, the same size trade that happens on Tuesday can have a lot more impact on Sunday. Someone trying to move a large amount or accounts being liquidated can start a drop in price that can snowball.
Late In The Week Headlines- As bad news comes out on a Thursday or Friday, it lingers through the weekend. Stories also build up during the week, even if they come out early as the 24-hour a day news never stops, but, it does slow down on the weekend. This can leave a bad taste in the mouth of investors until they make it back to Monday.
Volatility- Bloomberg reports that 95% of Bitcoin is held by 2% of investors in anonymous accounts. This issue is even compounded on the weekend when less activity is taking place.
Liquidity- New players that want to buy with borrowed money need the participation of banks. Margin calls can have a downward effect on weekends as the price dips and accounts are liquidated.
A Day of Rest- Even though you can buy and sell crypto seven days a week, that does not mean people are actually doing it. As more institutional money enters the crypto world, that means more people that take the weekends off are getting involved. People travel and relax on the weekend. Even someone who is constantly checking prices may slow down on the weekend.
Market Manipulation- While there is not a lot of evidence to suggest that it is happening, with less volume on the weekends, crypto is more susceptible to manipulation.
Staffing- Even something as normal as banks and liquidity providers not having their full staff available could affect trading.
Does this really hurt crypto in the long term? It is something that affects the long-term acceptance of crypto as a currency. Having a currency that is worth more on certain days of the week is not something that makes it preferred over the more stable dollar. It also is impacting regulation. While investment firms look to start crypto EFTs, volatility is something that is slowing the approval process down.
With only 6 percent of people in the US stating they owned crypto in 2020, by the end of 2021, the weekend effect will be less and less visible. The more people involved, the less the volatility, volume and other concerns will be a factor on the price.
Finally, I would leave you with the words of R. Kelly, “It’s the freakin’ weekend baby, I’m about to have me some fun.”
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