Cryptocurrency research firm Kaiko recently released a report indicating that this year’s Bitcoin weekend trading volume has dropped to 16% of the total trading volume, setting a new historical low. Simultaneously, Bitcoin’s volatility has also significantly decreased, which may be related to the launch of Bitcoin spot ETFs.
**Background Summary:**
CryptoQuant: Bitcoin miners’ selling pressure sharply reduced! BTC started a new round of rise in Q3.
**Additional Background:**
Bitcoin has been consolidating for four months; why I don’t think $73,000 is the cycle’s peak?
**Kaiko’s Cryptocurrency Research Data Shows:**
This year, Bitcoin’s weekend trading volume has dropped to a historic low of 16%. This situation became more pronounced after the launch of Bitcoin spot ETFs, suggesting that spot ETFs have made Bitcoin trading hours more akin to traditional stock exchange schedules (weekdays), reducing the volatility of Bitcoin prices during weekends.
This year’s Bitcoin weekend trading volume has dropped to 16%. Image source: Kaiko.
We know that the cryptocurrency market operates 24/7, including Saturdays and Sundays. In the past, Bitcoin often experienced significant fluctuations even on weekends. However, this phenomenon seems to be cooling down, with the proportion of Bitcoin weekend trading continuously decreasing from the 2019 peak of 28%. (If distributed evenly over seven days, the weekend proportion should be 28.5%).
**Spot ETFs Lead to Weekend Trading Volume Decline:**
One reason for the increasingly apparent phenomenon is likely due to Bitcoin spot ETFs following the traditional stock exchange schedule, with no trading on weekends. Kaiko’s senior analyst Dessislava Aubert believes that the decline in weekend trading volume is a multi-year trend that has been exacerbated by the advent of spot ETFs.
Kaiko points out that the proportion of Bitcoin trading between 3 PM to 4 PM Eastern Time on weekdays has increased from 4.5% in Q4 2023 to 6.7% in Q1 this year. This period is known as the benchmark pricing window, where ETF owners determine the price of Bitcoin and then use it to calculate the ETF’s net asset value.
On the other hand, Kaiko believes that the closure of crypto-friendly banks such as Silicon Valley Bank and Signature Bank is also one of the reasons for the decline in Bitcoin weekend trading volume. Market makers can no longer use these banks’ round-the-clock payment networks for immediate cryptocurrency transactions:
**Significant Drop in Bitcoin Volatility:**
Furthermore, another report by Kaiko found that institutions entering the cryptocurrency space by purchasing Bitcoin spot ETFs have significantly reduced Bitcoin’s price volatility. In November 2021, when Bitcoin reached its last all-time high, volatility soared to nearly 106%, but when Bitcoin refreshed its all-time high in March this year, volatility was only 40%.
Bitcoin’s volatility has significantly decreased this year. Image source: Kaiko.
In Kaiko’s view, the trend of decreasing Bitcoin price volatility, along with the fact that volatility has remained below 50% since the beginning of 2023, indicates that Bitcoin is becoming a more mature asset. Although it’s too early to say this is the new normal, the changes in Bitcoin’s market structure over the past year may help explain why Bitcoin’s trend has become relatively “boring.”
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