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Bitcoin Weekend Trading Slows Due to TradFi Institutions and Spot ETFs

The weekend trading volume of Bitcoin has seen a decrease since 2018, with a significant drop following the launch of Bitcoin ETFs in the United States in early January. Crypto research firm Kaiko notes that the decline in Bitcoin trading volumes on Saturdays and Sundays this year continues as institutional participation in Bitcoin leads to weaker market liquidity on weekends. From 2018 to 2021, about a quarter of Bitcoin’s trading volume occurred over the weekend, which has steadily decreased to 13% in 2024, as per Kaiko’s observation on February 26.

This reduction indicates worsening liquidity conditions during weekends, potentially explained by increased institutional participation and deteriorating market infrastructures. Kaiko points out that liquidity management on weekends has been a longstanding challenge for exchanges as the 24/7 digital currency trading area creates a mismatch between the operating hours of traditional financial institutions and the needs of large digital currency traders and market makers. This issue became evident when several crypto-friendly banks in the United States closed down.

Kaiko observed the decline in weekend trades both in U.S. exchanges and offshore exchanges. However, weekend trades in offshore exchanges like Binance, HTX, OKX, Bybit, and Upbit remained slightly higher, with offshore exchanges experiencing 15% of the volume compared to 11% in U.S. exchanges like Coinbase, Kraken, and Bitstamp. Kaiko noted weaker liquidity conditions on Coinbase over weekends compared to Binance, with transaction costs on Coinbase increasing since the second quarter of last year, unlike Binance.

The research firm highlighted that Bitcoin liquidity significantly improved following the launch of Bitcoin Exchange-Traded Funds (ETFs) in the United States. However, minimal transfers occurred between Bitcoin ETF issuers and exchanges over weekends, concluding that this gap might widen as ETF issuers continue to increase their Bitcoin reserves.

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