For starters, one of the coolest thing about crypto trading is that you can trade crypto 24 hours a day. There is nothing stopping you for trading into the wee hours of the day and the next morning as well. Hence we often see wide swings in a 24 hour cycle as groups of people start waking up and listening to FUD and FOMO news and start their fanatic trading. And I like it. Sometimes at night when I have nothing else on my plate, I would like to take a look at the crypto market and see is there anything nice to buy or something to sell. If you are like me with a full time job and treat crypto as a hobby, this actually is for you. The traditional stock market is kind of impossible for most of us if you are working full time, unless you are sneaking off work to do trading during your shift.
But as I started crypto trading a few months ago, I realized that it seems that the market tends to drop at the weekends. Which initially I thought was kind of strange as weekends would be the best time to trade. Then I understood that small time retail traders like me basically don’t move markets. What we “pump” into the market in the weekends, probably isn’t much of a blip on the crypto radar.
So why is it exactly that causes the dip in the weekends, especially if you are looking from the US side. Well here are some rather interesting observations.
- Banks are not open. It is simple as that. When banks are not operating, it is kind of difficult to buy cryptos right? For traders in Singapore, remittance from the banks will only be processed during the weekdays. So nothing is being moved during the weekends. So if you are hoping for the pump, you might want to reconsider. Of course you could consider P2P trading via bank transfers but again, those would probably be smaller amounts. Not enough to move markets. With reduced sources of funds coming in…well we get spooked much easier.
- Low volume? Less institutional traders and whales means less trading volume. Not all those high stake traders would want to work in the weekends. They would probably want to go out to party, get drunk and others. And they can afford it, no problem. Even with extremely hardworking ones, they still have to rest sometimes. If they don’t rest during the weekdays, the only option would be the weekends. And with less volume means that it is easier to manipulate prices by those who remain. This actually makes perfect sense as prices can move much easier if you have just 10 traders compared to 100 traders.
- Liquidity issues. Same as the low volume, the low liquidity in the liquidity pools means easier to move prices. That is a fact. Just imagine comparing 10K ETH & 400K UDT and 1K ETH & 40K in a pool. Which would be easier to manipulate? Of course this would not explain why the prices go down during the weekend. But the next point should.
- Combination of all of the above. So now just imagine you are a weekend trader in the volatile crypto market with all the above happening. What will happen? Unless we get some positive news, the inevitable will happen – prices will drop. There is less trading volume and less to sustain the prices. And with less support (funds coming into the crypto market) means if some negative happens, it will tend to go to the downside.
Yes I cannot be definite that prices will always dip during the weekends. In fact there are numerous times where prices rise significantly during the weekend. There are also lots of crypto experts saying that this weekend dip theory is just not true. The crypto market is just so volatile. But in a lot of cases, I think this often holds true. Of course you should do your own research and never based what you are planning to buy or sell on just one blogger.