Many new investors in cryptoassets, particularly those who have previously traded in stocks, have questions about when the crypto market opens and whether it even closes, and on what days it operates.
Read on to find out more about the operating hours for crypto markets and if there are any significant changes in trading between weekends and weekdays.
Crypto Market Trading Hours
One of the primary advantages of trading in crypto over traditional securities is the open availability of the market. Unlike stocks, which have limitations on trading hours, crypto markets don’t have opening or closing hours – essentially, they operate 24 hours a day.
These hours hold for all days of the week, meaning that the crypto markets are available to investors 24/7, with no weekend breaks. In addition, crypto exchanges are open on public and national holidays, meaning that active investors are free to make trades every day of the year.
The availability of crypto trading is in stark contrast with most traditional financial markets around the globe. In the U.S.,the stock market is open only during the week, with trading limited to Monday through Friday from 9:30AM EST to 4:00PM EST. While some stocks can be bought and sold in so-called “extended-hours trading,” which typically ranges from 4:00AM EST to 8:00PM EST, the hours are still significantly limited compared to crypto.
The U.S. stock market is also closed for a large number of holidays, with both the New York Stock Exchange (NYSE) and Nasdaq closed for the entire day of trading. In 2023, for example, the market will be closed for ten holidays, including Martin Luther King Day (January 16), President’s Day (February 20), Good Friday (April 7), Memorial Day (May 29), and Labor Day (September 4). There are also a handful of trading days when the markets close early, such as July 3 and Black Friday (November 24).
Unlike in crypto, which operates 24/7, investors who submit an order outside of regular stock market hours may not have their order filled until the market opens, which can mean waiting days for trades submitted after-hours on a Friday. Even when brokers allow for extended hour trading, it is advised that new investors hold off on making trades due to the significant drop in volume, which can lead to orders being filled at less desired prices.
How Crypto Markets Change Throughout the Week
While the crypto markets may operate on a 24/7 basis, the day of the week can have a significant impact on trading. Similar to the drop in liquidity for the traditional markets in after-hour trading, crypto markets experience a swing in activity on weekends and holidays. Some experienced investors refer to the change as the “Sunday effect.”
The sudden drop in trading activity, which tends to occur on weekends, leads to greater price swings for cryptoassets compared to regular trading hours during the week. Because there are fewer traders and less trading activity, the liquidity on exchanges drops during these market lulls.
Breaking news or other stirs in the market can lead to disproportionate price swings, which can prove to be either fortuitous or detrimental for traders venturing orders during that time.
Trading on the margin, where investors borrow money from a brokerage in order to leverage bigger trades, also contributes to the swing in prices on weekends. Falling prices will cause traders who are long on trades to sell assets in order to pay back what they borrowed.
The influence of margin traders selling in conjunction with a low liquidity market and falling prices can lead to even further declines. Some brokerage exchanges exacerbate the problem further by requiring higher margins on weekends, thereby forcing margin traders to put up more collateral for their investments.
By studying historical market data, a report by CNBC claimed that Bitcoin’s greatest price changes have occurred primarily on weekends. BTC’s previous all-time price high of $19,600 in December 2017 occurred on a Saturday, as well as many of the cryptoasset’s relative lows. In addition, the report found that 82% of trading weekends have seen a minimum 3% move in price in either direction for Bitcoin.
A similar report by Investopedia blamed lower trading volume and disproportionately large individual orders on weekends for the outsized price swings. According to the report, so-called ‘Bitcoin whales’ are more active on weekends and have a greater influence on the cryptoasset’s price due to the lower liquidity.
The report also attributed the swing in prices to the mismatch between crypto trading and banking hours, with BKCM founder and CEO Brian Kelly noting that there is a lack of new money coming in on weekends to support prices.
Is There a ‘Best’ Time to Trade Crypto?
While there is no magic bullet for timing the crypto markets, a report by CoinDesk noted that there are changes in crypto trading during certain hours and days of the week. The report claims that prior to crypto gaining mass adoption in 2021, Asian markets held the largest sway over prices.
Bitcoin’s 2017 rally was positively correlated with the onset of waking hours in Japan, when traders in that country became more active. Conversely, many investors up until 2021 would become more bearish in the leadup to the Chinese New Year, fearing the massive selling pressure of Chinese crypto miners.
Mati Greenspan, CEO and founder of investment advisory group Quantum Economics, argues that the mainstream adoption of crypto–and, more importantly, the involvement of Wall Street–has shifted the trading impact from Asian to Western markets. Bitcoin spot volume is now more intimately connected with U.S. stock market hours, with volume peaks having a similar correlation.
Similar to other warnings, the report advises investors to be wary of trading on weekends. In addition to the increase in volatility, the report claims there is an uptick in activity by algorithmic trading bots and market makers on weekends, who seek to take advantage of the absence of more professional investors. According to the report, a similar legacy occurred in traditional Forex markets, when the drop in liquidity would lead to greater manipulation by big market players.
In contrast to trading Bitcoin and cryptoassets, the report did find that transacting outside of traditional U.S. market hours was a smarter strategy for trading DeFi tokens. In large part, this was attributed to the drop in Ethereum gas fees (transaction costs), which typically peak around 5 PM EST. Traders looking to save the most on gas fees should avoid peak activity on Ethereum’s blockchain and instead stick to less conventional market hours for placing DeFi orders.
Featured image via Unsplash.