A recent study by the crypto research firm Kaiko has shown a notable decline in Bitcoin trading volumes during weekends throughout the year 2024, marking a shift from previous years where weekends accounted for approximately a quarter of Bitcoin’s trade activity. Since the rise of institutional investment in Bitcoin, weekend market liquidity has weakened, with only 13% of trading occurring during these days so far in 2024, a significant drop from the 2018-2021 trend.
Weekend Trading Woes for Bitcoin Exchanges
Kaiko has highlighted that the perpetual nature of the cryptocurrency market does not align with the operational hours of traditional financial entities, posing a challenge for exchanges to maintain consistent liquidity, especially on weekends. The firm associates this dilemma with the uptick in institutional investment and the deterioration of market infrastructure, both leading to poorer liquidity conditions during off-peak hours.
Further evidence of this trend was seen when several crypto-friendly banks in the US ceased operations, showcasing a drop in weekend trades both domestically and on international platforms. Nevertheless, off-shore exchanges such as Binance and others continue to exhibit relatively higher weekend trading volumes of 15%, compared to a mere 11% observed on US platforms like Coinbase and Kraken.
Impact of ETFs on Bitcoin Liquidity
Analyzing the effects of spot Bitcoin ETFs on the market, Kaiko noticed that US-based Coinbase suffered from weaker liquidity conditions on weekends compared to off-shore giant Binance. Despite this, since the introduction of spot Bitcoin ETFs in the US, Bitcoin liquidity has shown signs of recovery. However, low activity between spot Bitcoin ETF issuers and exchanges over weekends could potentially exacerbate the liquidity gap as ETFs amass more Bitcoin holdings.
The research underscores the evolving landscape of Bitcoin trading, emphasizing the growing influence of institutional investors and how it shapes market dynamics, including liquidity and trading costs. As the crypto market continues to mature, these trends may become more pronounced, potentially influencing the operational strategies of both exchanges and investors.