Bitcoin and other cryptocurrencies are often praised for offering around-the-clock trading access, a feature that allows investors to react swiftly to global market events. However, this constant availability can also exacerbate market volatility, as demonstrated by the recent steep sell-off following new US trade tariff announcements.
Unlike traditional financial instruments, Bitcoin (BTC) operates 24/7 thanks to blockchain technology, enabling continuous payments and trading opportunities. This unique advantage often means that during times of global financial distress, as seen when the S&P 500 experienced a record decline of over $5 trillion in just two days, Bitcoin remains an attractive option for investors looking to liquidate their positions.
Despite a strong showing initially, maintaining a support level above $82,000, Bitcoin saw a drastic decline to below $75,000 by Sunday. Lucas Outumuro, head of research at the crypto intelligence platform IntoTheBlock, attributes much of this volatility to Bitcoin being the only major asset available for trading during the weekend. “There’s very little people can sell on a Sunday because most markets are closed,” he stated. “That also enables the correlation because people are panicking, and Bitcoin is the largest asset they can sell over the weekend.”
While the weekend trading environment can lead to rapid price corrections, it can also present opportunities for price rallies in calmer conditions.
After initially decoupling from traditional assets following a $3.5 trillion drop in the U.S. stock market, Bitcoin ultimately succumbed to widespread panic as the fear from traditional markets spilled into the cryptocurrency space amid escalating concerns over the trade war.
Rethinking Investment Strategies
Blockstream CEO Adam Back emphasizes the risks associated with the 24/7 trading model, noting that many Bitcoin investors are “all in” and often overleveraged. He remarked during a recent conversation at Paris Blockchain Week that the high level of engagement from investors—who are often financially stretched—combined with the ongoing liquidity, markedly heightens the risk of rapid price drops.
Back mentioned that low trading volumes on weekends can lead to flash crashes, making the market more susceptible to volatility. He reiterated his belief that Bitcoin could ultimately rival gold as a hedge against inflation, especially as traditional markets face increasing uncertainty.
As the cryptocurrency landscape continues to evolve, investors must navigate the complexities of 24/7 trading dynamics. Understanding the implications of this constant access is crucial for formulating effective strategies and managing risks in an increasingly unpredictable market.
