Spot Bitcoin ETFs Change Trading Patterns, Volatility Sees Noticable Drop

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 be bringing Bitcoin closer to traditional financial markets, impacting trading times, volatility, and overall market behavior.

The introduction of Bitcoin Cash 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.

Spot the Shift in Bitcoin ETF Market Dynamics

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 Bitcoin traded on Saturdays and Sundays has fallen to just over 15% this year, a substantial drop from its peak of 28% in 2019. This trend, although 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 ETF fixing window, 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, further contributing to the decline in weekend trading volume.

Interestingly, institutional adoption of crypto through Bitcoin ETFs have led to a significant decrease in price volatility. When Bitcoin hit its last all-time high 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 sale of MetaMask securities

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 IBIT ETFAccording to data from Farside Investors, the overall US spot Bitcoin ETF sector 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 major Bitcoin ETFs. GrayScale’s GBTC and Fidelity’s FBTC reported capital outflows of $27.2 million and $25 million, respectively. However, these outflows were offset by the substantial inflow from BlackRock and additional ARKB contributions from Ark 21Shares, which saw an inflow of $42.8 million.

Read also: Hamster Kombat Token Launch Echoes Buzz in P2E Crypto Industry, Here’s Everything

Source