Bitcoin Weekend Volatility Surges: Spot Bitcoin ETFs Trigger Wild Weekend Volatility, Says Kaiko Report
Bitcoin Weekend Volatility Surges – Since the introduction of spot Bitcoin exchange-traded funds (ETFs) in the United States, Bitcoin has become more prone to significant price swings over weekends, according to a recent report by Kaiko Research. The report, published on August 12, highlighted a shift in Bitcoin’s liquidity patterns, with trading activity becoming more concentrated on weekdays, particularly in BTC/USD markets.
Liquidity Concentration and Volatility Trends
Kaiko’s crypto analysts observed that weekend trading volatility has generally decreased since 2021, aligning with a previous trend where Bitcoin’s weekend trading volumes have declined as institutional involvement and ETF activity have grown. However, this increased focus on weekday trading has created a higher risk of sharp price movements during weekends, especially under market stress conditions.
During a significant Bitcoin sell-off on August 5, where the cryptocurrency’s price dropped below $50,000, Kaiko noted a phenomenon of “liquidity fragmentation” across the crypto markets. This fragmentation led to noticeable price discrepancies between different exchanges, disproportionately affecting smaller, less liquid platforms.
Impact of Weekend Sell-Offs on Market Stability
The report emphasized that the continuous operation of crypto markets, which remain open 24/7, contrasts sharply with traditional markets that close over the weekend. This operational difference can exacerbate the impact of sell-offs that begin on a Friday, leading to heightened uncertainty and amplified price movements over the weekend. Kaiko pointed out that during the August 5 sell-off, Bitcoin experienced a 14% price fluctuation from the U.S. market close on Friday, August 2, to its reopening on Monday, August 5—mirroring the behavior observed during major sell-offs since 2020.
Slippage and Liquidity Challenges Across Exchanges
Kaiko’s analysis further detailed the significant price slippage experienced during the August 5 sell-off. A $100,000 Bitcoin sell order would have caused notable slippage across various exchanges and trading pairs. For instance, the Bitcoin/yen pair on Zaif experienced slippage of up to 5.53%, while the BTC/euro pair on KuCoin saw nearly 5.5% slippage. In contrast, U.S. dollar stablecoin pairs on BitMEX and Binance.US experienced slippage reaching up to 4% on the same day.
The Growing Influence of Bitcoin ETFs on Market Liquidity
As of now, the 11 spot Bitcoin ETFs in the U.S. have attracted $17.3 billion in net inflows since January, collectively holding approximately 4.7% of Bitcoin’s total supply. This concentration of Bitcoin within ETFs has given them considerable influence over the cryptocurrency’s overall liquidity, further contributing to the observed market dynamics.
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