Bitcoin Weekend Trading Decline: Institutional Impact & Liquidity Challenges

Bitcoin trading on Saturdays and Sundays has continued falling this year, according to crypto research firm Kaiko. Increased institutional participation in Bitcoin is the reason for poor weekend market liquidity.

Between 2018 and 2021, around a quarter of the total Bitcoin trading volume occurred on weekends. This proportion has since seen a steady decline. So far in 2024, it has fallen to just 13% of total volume, Kaiko noted in a report published on Feb. 26.

“The decline suggests worsening liquidity conditions during weekends and could be explained by increased institutional participation and worsening market infrastructure,” Kaiko wrote in their report.

The volume of trades for Bitcoin during the weekend. The 2024 data spans Jan 1 to Feb 20. Source: Kaiko

Kaiko said managing weekend liquidity has been a longstanding challenge for crypto exchanges. The 24/7 nature of crypto trading creates a mismatch between the operating hours of traditional financial institutions and the needs of large crypto traders and market makers.

Kaiko noted in their report that several crypto-friendly banks in the United States closed down, evidencing this mismatch firsthand.

Weekend Liquidity Shortfall on Bitcoin Exchanges

Kaiko noted a steep fall in trading volume at offshore and US exchanges on the weekend. However, the trades made via weekends still dominate in offshore exchanges such as Binance, Huobi Global, OKX, Bybit, and Upbit. On most weekends, trading off the shore thrills 15% of the total volume compared to 11% at the US trade centers.

Volume of weekend Bitcoin trade among US exchanges, divided in half. Source: Kaiko

In particular, Kaiko said that, in contrast to Binance, it saw “poorer liquidity circumstances” on the US-based Coinbase exchange during the weekends.

According to Kaiko, there has been a significant improvement in Bitcoin liquidity circumstances since the US authorities approved and introduced spot BTC exchange-traded funds (ETFs). But Kaiko noted that there haven’t been many transfers from ETF issuers and exchanges over the weekend.

Weekend Bitcoin ETF transactions between exchanges and ETF providers. Transfers into ETFs are shown in dark blue, and transfers out of ETFs are shown in dark orange. Source: Kaiko

Kaiko concluded that this gap in weekend liquidity may continue to increase as Bitcoin ETF issuers accumulate more Bitcoin holdings.

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Furthermore, the author’s views are for reference only and shall not constitute investment advice. Before purchasing, please ensure you fully understand and assess the products and associated risks.

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