Why Is the Cryptocurrency Market so Volatile on the Weekends?

The cryptocurrency market is unique in that it is on 24/7. Unlike traditional markets like stocks, cryptocurrency trading never sleeps. If you’ve been around since 2017, you might also have noticed that it is during the weekends that volatility tends to be more apparent. In fact, it was commonly called the inevitable “weekend dip.” The truth is, however, this assumption is actually not based on reality. The only consistency has been that weekends are usually a time of great volatility — with no way to predict it. Take, for example, just the past few months: 40 percent of Bitcoin’s price gains have occurred on the weekends since May. In 2017, Bitcoin reached its all-time-high on a Saturday in December 2017. Both of these examples point to more than mere coincidence.

Possible Reasons

What could be the reasons for increase volatility on weekends? For one, most cryptocurrency projects release news on Monday, as Bloomberg writes. Therefore, many traders buy-in during the weekends in anticipation of a price spike during the weekday. Secondly, weekends are a time for cryptocurrency traders to regroup. Investors may spend this time discussing with friends or colleagues on the newest trends and the most exciting prospects. Thirdly, there is generally a noticeable trading volume dip on weekends. This means that price movements are much more noticeable. According to Bloomberg Intelligence analyst Mike McGlone, much of the volume during the weekends also tend to come from Asia. “It is more Asia and those more sophisticated traders picking time and paths of least resistance to profit,” he says. It is during these ‘quieter’ trading days on Saturday and Sunday that major price movements tend to occur. Finally, sometimes the weekend creates FOMO. After all, an anxious trader who watches a steady price rise through the week might impulsively buy on the weekend.

A 24/7 Market

The reason analysts have been puzzled over the market volatility of cryptocurrencies during the weekend is that, frankly, we have never had a market like this before. The cryptocurrency market never shuts off; always trading, it is prone to volatility when we least expect it. This means that we can’t rely on old metrics of traditional markets to predict cryptocurrency price movements. Do you agree that weekends tend to especially volatile for the cryptocurrency market? Let us know your thoughts below.