Bitcoin’s Declining Weekend Liquidity
A new blog post by analysts at blockchain market data provider Kaiko has revealed a significant decline in weekend Bitcoin trading. The share of Bitcoin traded on weekends has dropped from 24% in 2018 to just 13% in 2024. Kaiko’s data shows that weekend liquidity has particularly impacted crypto-fiat trading, with BTC-USD weekend trading volume hitting a historic low of 2 million BTC last year. Furthermore, the bid-ask spread of Bitcoin indicates that weekend liquidity is poorer on Coinbase than on Binance, suggesting varying levels of market activity during weekends in different exchanges.
Shift in Market Participation
The decline in weekend trading volumes on offshore exchanges from 27% to 15% and onshore markets from 21% to 11% suggests a shift in market participation. Historically, higher figures for offshore participation indicate that weekend players in crypto have largely been retail customers rather than institutions. Notably, none of the transactions related to the recent spot Bitcoin exchange-traded funds (ETFs) approved by the US SEC happened on weekends, highlighting a distinct change in market behavior with the influx of institutional money into Bitcoin.
Impact of Bitcoin ETFs on Trading
The most significant price-driving narrative in 2024 has been the approval and launch of Bitcoin exchange-traded funds (ETFs). This development has led to a surge in Bitcoin trading, with its price reaching over $59k, a level not seen since November 2021. The SEC’s approval of spot Bitcoin ETF trading has attracted billions in institutional investment, signifying a major shift in market dynamics.
Several asset managers, including ArkInvest and GrayScale, had long sought approval for spot Bitcoin ETF products but were repeatedly rejected by the SEC. However, following a federal court ruling that deemed the agency’s rejection of Grayscale’s application “arbitrary and capricious,” ETFs were eventually approved to trade on January 10, 2024. The subsequent influx of inflows into these ETFs, with market leader Blackrock’s ETF recording an unprecedented $1.3 billion in inflows in a single day, demonstrates the impact of institutional participation on Bitcoin trading.
Ian is a cryptocurrency enthusiast blending humor with professionalism. With an engineering background and a storyteller's heart, he simplifies the blockchain world with sharp analysis and a touch of wit. At Cryptowire, he brings his unique perspective to make digital financial innovation accessible to all.
