Bitcoin and crypto assets become the Wild West for trading over weekends, and no one can seem to figure out what’s going on.

Analysts Weigh In

According to data published by Bloomberg, weekend price surges for bitcoin have contributed to 40% of the currency’s gains in 2019. Crytpoassets, unlike traditional stocks, can be traded 24/7 around the world, which has led to a cycle of spikes in valuation over the weekend. Even the last all-time high for bitcoin of $19,700 occurred on a Saturday. 

David Tawil, president of crypto hedge fund ProChain Capital, called the situation “absolutely unique” for cryptocurrency. The same decentralized framework that drives bitcoin’s public ledger also allows for endless crypto-asset trading–a feature that may be contributing to the volatility. 

Bitcoin weekend price volatilityBitcoin weekend prices | Source: Bloomberg

Delayed News Cycle

Some analysts speculate that the traditional news cycle is one cause for the weekend surges. While news media has become a neverending stream, most companies wait until Monday to release updates or significant announcements. The same applies to the majority of cryptocurrency organizations. 

Tawil believes that weekend volatility is a result of traders attempting to get ahead of the news cycle.

He told Bloomberg

“It’s a little bit of anticipatory or front-running the news cycle by trading up on the weekend. You’re somewhat flying blind in the sense that you don’t know if there will really be an announcement made on Monday morning but in a packed news cycle like crypto, where there’s developments really every day, I don’t think it’s wrong to bet that Monday morning would have a positive development.”

Echo Chambers & Groupthink

Hunter Horsley, chief executive officer of Bitwise Asset Management, thinks that weekends have become an echo chamber for speculative behavior. Horsley attributes the volatility to retail investors consolidating similar information into trades.

He said, 

“The market is, by and large, retail individuals and I think that weekends are a time when those people have more free time to read the week’s news, to chat with friends, to pitch friends on exciting things they heard about during the week.”

Most investors are familiar with the ‘Thanksgiving dinner’ effect on bitcoin’s price in November 2017. According to the theory, families spent their mealtime discussing the sudden craze over bitcoin, which led to the all-time high in price for December 2017. 

More recently, large-scale crypto conferences have been shown to have a similar impact. Horsely explained that the price of bitcoin surged during New York’s Blockchain Week held in May.

Fear Of Missing Out

FOMO has a role to play in bitcoin’s weekend rallies. The combination of retail investors and an endless trade cycle is fuel to the fire for sudden price surges.

Previously timid investors are more likely to jump on the rising price of bitcoin as their willpower wanes throughout the week. In one instance, bitcoin gained 19 percent during the third week of June before jumping 10 percent over the weekend. 

Naeem Aslam, chief market analyst at Think Markets UK, blamed FOMO and overly eager investors, which also includes traders looking for the post-weekend dip,

“It is mainly driven by opportunistic investors, people who are following the herd and have huge FOMO…Given the past few weekends, I am certain that many have been waiting to buy Bitcoin at a discount price.”

Other analysts also speculate the drop in weekend trader volume contributes to the volatility. While the prices increase on weekends, the overall number of active traders goes down. The result is a highly manipulable market. 

One Bloomberg analyst said he “fully” expects leveraged and professional money players to take advantage of this time.