Bitcoin’s Weekday Weekend Dichotomy and the nature of bitcoin as the only alive weekend market
I think there has been an observation that Bitcoin prices goes up on weekdays and go down on weekends (and litecoin follows)
Possibly, what accounts for this is entirely my conjecture, but is simply that hedge funds, venture caps, funds and even banks live on a 5 day week, while bitcoin is a perma online market 24/7 for 365 days a year. Miners are also consequently “perma mining”. Or to put it another way, if you are working a 9 to 5 job, how many times have you been annoyed that the bank closes before you managed to rush down? Not really a problem with Bitcoin. Stock markets, commodity markets, futures exchanges, they all close down on TGIF, not so for the cryptocoins. You can see it when zerohedge observed the fear and panic spreading from say a sovereign default rushing straight into bitcoins on a weekend, since it is the only “open” market. Bitcoin is the “market that never sleeps”.
And that’s also a beauty of it. You don’t need any humans, and best of all no evil bankers!
Mtgox hoewever, for one, has been called a “futures exchange” for the difficulty in withdrawals and deposits unless you do it domestically.
What is one possible reason, might be that on a weekday basis, the Institutionals (funds and banks and all that) are in their 9 to 5 job, so they are working to buy or sell their bitcoins. When it comes to the weekend, they are afraid to hold it “overnight” well here it is “over weekend”. So they want to close off their positions and sell it off. They want to end up with net exposure for the weekend. Otherwise they may have to come back to work on the weekend, or they may lose their job if there is a downside swan risk flying in over the weekend a la china announcements.
Their counterparties would then include mining organisations or co-operatives. It would definitely be the case that funds will source for their bitcoins from off-exchange and off-market sources. You have the big idle hands, who may allow funds to borrow from them, the miners, who are happy to be locked into “futures” contract on bitcoins to lock in their mining infrastructure and hardware recoupment costs. And then when it comes to the weekend, institutional activity will dry up. Meanwhile, the miners still need to pay their bills (electricity), so they would have to swap their coins for dollars (or yuan) and they will have to dump it onto the exchanges. There’s no counterparty institution to soak it up on the weekend.
On the flipside, while the institutional are on the weekdays, the retail would be on the weekends as they think and plan and get into things. A bit like the money changer on the weekend. You also have the casual miner, who has the rig mining 24/7, but perhaps only has time to do a bit of trading, of selling on the weekend. He may be selling off to cover rising living expenses from inflation. Or hyperinflation in the case of Argentina.
Well, that’s conjecture on my part anyway.
What do you think?