Bitcoin Faces ‘Sharp Weekend Price Swings’ as ETFs Concentrate Liquidity on Weekdays

Bitcoin weekend trading has become more volatile due to liquidity being concentrated on weekdays, influenced by the growing impact of spot Bitcoin ETFs. This shift increases the risk of significant price swings during weekends, as noted by Kaiko Research.

Bitcoin’s susceptibility to wild weekend price swings has increased with the rise of spot Bitcoin exchange-traded funds (ETFs), according to a recent report by Kaiko Research. The report, released on August 12, highlights that Bitcoin’s liquidity is becoming more concentrated on weekdays, particularly in BTC-USD markets, as institutional and ETF activity grows.

Historically, weekend trading volatility in Bitcoin has been a notable concern, but Kaiko’s data suggests that this trend has been amplified in recent years. As trading volumes migrate more towards weekdays, the risk of sharp price swings during the weekends has intensified, especially during periods of market stress.

During the recent Bitcoin sell-off on August 5, where the cryptocurrency’s price dipped below $50,000, Kaiko observed “liquidity fragmentation” across various exchanges. This fragmentation led to significant price discrepancies, particularly affecting smaller and less liquid exchanges. Bitcoin’s price moved by 14% from the close of U.S. markets on Friday, August 2, to their reopening on Monday, August 5, echoing patterns seen in major sell-offs since 2020.

Kaiko’s report also noted that a $100,000 Bitcoin sell order during this sell-off would have caused significant price slippage, depending on the exchange and trading pair. For instance, Zaif’s Bitcoin/yen pair experienced slippage of up to 5.53%, while KuCoin’s BTC/euro pair saw slippage nearly reach 5.5%. In contrast, U.S. dollar stablecoin pairs on BitMEX and Binance.US had slippage of up to 4%.

The rise of spot Bitcoin ETFs in the U.S., which have attracted $17.3 billion in net inflows since January, plays a substantial role in this trend. These ETFs currently hold about 4.7% of Bitcoin’s supply, giving them considerable influence over the cryptocurrency’s liquidity. As these ETFs continue to draw liquidity towards weekdays, the potential for sharp weekend price movements remains a key concern for traders and investors.

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