Anyone who has been a part of the cryptocurrency world at some point notices that there is a typical behavior of the market during weekends. There are some exceptions, but usually we see the price of significant cryptocurrencies drop over the weekend.
Of course, for those who operate in the market, the phenomenon is known, but the detailed understanding appears to be more complex.
So, why is it that cryptocurrencies prices drop at weekends?
Unfortunately, we do not have a definitive answer to that question. Anyway, what is clear to us, is that there are two main factors from which the situation depends on:
The cryptocurrency market is too young
Although the first cryptocurrency came to life in 2009, the current rate of cryptocurrencies is unprecedented. Today, there are so many cryptocurrencies, and some of them are really dominating the sector and investing in the crypto market is definitely not like operating in a mature industry.
It is possible that there isn’t a unique reason
Although it seems pretty tempting to say that there is a specific reason for prices to fall on weekends, the reality is much more complicated. There are many factors, creating financial market reactions.
Banks
Banks undoubtedly play a role in the cryptocurrency market. Since swap operations are growing in popularity, more crypto exchanges allow the use of fiat currencies. This means that a huge part of investors prefer buying crypto with fiat money rather than using other cryptocurrencies.
Fiat money is stored at banks, and most of them do not operate at weekends, so this may be one of the reasons why prices go down during that time of the week.
Margin trading
First of all, let’s have a look at what exactly margin trading is.
If there is an event, leading to a decrease in the price of cryptocurrencies, and you have a margin loss position, it has to be covered to avoid being closed at loss. This operation is known as a margin call. To prevent it, investors can decide to be bearish on a token, covering the loss and with that, crypto prices become lower.
Market manipulation
If you ask yourself if there could be market manipulation, the answer is yes. It is absolutely possible that there are some manipulations during the weekend. For example, if anyone decides to target a particular cryptocurrency with selling orders, pushing the market quote down.
Truth is, the cryptocurrency market could use a little more regulation.
The psychological factor
Market psychology is another significant factor, which has its impact. There is a popular theory in the financial world, saying that if investors think something will happen, it will happen eventually.
Why is that?
If we assume that everybody thinks that crypto prices are going down on Saturday morning, it will result in investors betting on the collapse of the market. While doing so, they will sell coins at a high rate, leading to the need to move lower.
As it is clear, there can be many factors impacting the cryptocurrency prices on weekends. It is clear that no financial market processes are easy, and they are even harder when we talk about cryptocurrencies. One thing we know for sure, and it, is that cryptocurrency prices tend to decline over the weekend, although there is not a clear reason for that.
Of course, price differences can be seen as a good thing in the crypto world. Cryptoarbi is an automated arbitrage platform. We will help you find the best trading opportunity and make the best out of it. Trust us, and we will do the work for you!