ETFs
Spot Bitcoin ETFs Change Trading Patterns and Volatility Sees Notable Decline
The Bitcoin market is undergoing a significant transformation in its trading patterns. Recent data suggests a notable shift in the way the leading cryptocurrency is bought and sold, potentially marking a new era in its development. This shift appears to bring Bitcoin more in line with traditional financial markets, impacting trading times, volatility, and overall market behavior.
The introduction of Bitcoin Exchange Traded Funds (ETFs) early 2024 appears to be one of the main drivers of these changes. These ETFs have quickly gained popularity among investors since receiving approval from the United States Securities and Exchange Commission.
Bitcoin ETF Market Dynamics Shift
One of the most notable changes is the significant decrease in Bitcoin trading on weekends. Data from cryptocurrency Research firm Kaiko reveals that the proportion of bitcoins traded on Saturdays and Sundays has fallen to just over 15% this year, a substantial drop from its 2019 peak (28%). This trend, which has been going on for years, has been accelerated by the introduction of Bitcoin ETFs.
The impact of ETFs is also highlighted by a shift in weekday trading patterns. The proportion of Bitcoin traded between 3pm and 4pm, which is the benchmark fixing window for ETFs, has increased from 4.5% in Q4 2023 to 6.7% currently. Additionally, the collapse of crypto-friendly banks in March 2023 limited the ability of market makers to use 24/7 payment networks for real-time crypto transactions, contributing to the decline in weekend trading volume.
Interestingly, institutional adoption of crypto via Bitcoin ETFs have led to significantly lower price volatility. When Bitcoin last hit record highs in November 2021, volatility spiked to nearly 106%. In contrast, when Bitcoin hit its all-time high of $73,798 in March 2024, volatility was just 40%. This reduced volatility, which has remained below 50% since early 2023, is seen as an indication of Bitcoin’s maturity as an asset.
Read also : Ripple CTO supports Consensys in SEC lawsuit over MetaMask securities sale
Recent Market Performance and ETF Flows
Despite recent changes in trading patterns and reduced volatility, Bitcoin continues to post strong overall performance. It is currently trading around $61,000 and is up about 45% year-to-date. However, the cryptocurrency has recently faced challenges, falling below $60,000 due to tepid trading in Bitcoin Spot ETFs in the United States.
Interestingly, even though the price of Bitcoin fell, ETFs saw positive momentum for four consecutive days. This influx was largely fueled by significant contributions from BlackRock’s IBIT ETF. According to data from Farside Investors, the overall Spot Bitcoin ETF sector in the United States saw an inflow of $73 million, with BlackRock’s IBIT ETF receiving a substantial $82.4 million.
This positive flow for BlackRock contrasts with outflows from other large Bitcoin ETFs. GrayScale’s GBTC and Fidelity’s FBTC reported outflows of $27.2 million and $25 million, respectively. However, these outflows were offset by the substantial inflow from BlackRock and additional contributions from Ark 21Shares’ ARKB, which saw an inflow of $42.8 million.
Read also : Hamster Kombat Token Launch Echoes Buzz in P2E Crypto Industry, Here’s Everything
✓ Share:
CoinGape comprises an experienced team of native writers and content editors working around the clock to cover global news and present news as fact rather than opinion. CoinGape writers and journalists contributed to this article.
The content presented may include the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or publication assumes no responsibility for your personal financial losses.