CDS Crypto News Bitcoin Weekend Volatility Surges After U.S. Spot ETF Launch, Kaiko Reports
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Bitcoin Weekend Volatility Surges After U.S. Spot ETF Launch, Kaiko Reports

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Bitcoin Weekend Volatility Surges After U.S. Spot ETF Launch, Kaiko Reports

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.

Bitcoin Weekend Volatility Surges After U.S. Spot ETF Launch, Kaiko Reports

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.

For the latest in crypto updates, keep tabs on Crypto Data Space.

Bitcoin Weekend Volatility Surges After U.S. Spot ETF Launch, Kaiko Reports

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