One of crypto’s focal characteristics is that it trades around the clock, every day of the year. Now the market is, due to a number of recent shifts in the industry, becoming much more focused on a Monday-through-Friday routine.
(Bloomberg) — One of crypto’s focal characteristics is that it trades around the clock, every day of the year. Now the market is, due to a number of recent shifts in the industry, becoming much more focused on a Monday-through-Friday routine.
Thanks to the closure of Silvergate Capital Corp.’s Silvergate Exchange Network, as well as the shuttering of Signet — the real-time payments network for crypto companies operated by the now-failed Signature Bank — markets have become “less 24/7,” according to researcher Kaiko. Average daily weekend volumes have dropped by 10%, while the weekday measure has risen by 16%.
The “dynamic is definitely changing. Crypto markets are becoming less 24/7 now, particularly in the US with the closure of SEN and Signet,” said Conor Ryder, research analyst at the firm. “Market-makers are forced to use more traditional payment rails that mostly aren’t open at weekends and so we’re seeing more volume take place during the week now.”
Ryder added that “this is one of the indirect consequences of the regulatory environment in the US, and we could see crypto firms who prioritize 24/7 settlement move overseas to friendlier jurisdictions.”
Silvergate’s payments platform was its flagship offering — it had called it “the heart” of its group of services for crypto clients. The system offered clients the ability to move cash to each other around the clock, with the slogan: “Goodbye, regular banking hours. Hello, 24/7.” Silvergate and Signature both collapsed in March in the midst of banking-sector turmoil.
Lots of market-watchers have been focused on crypto trading volumes as well as liquidity. Volumes have dried up in the wake of last year’s disastrous crypto blowups, with retail investors fleeing the market amid a severe downturn in prices. Certain measures show volume recently hit the lowest since 2020.
Binance, the world’s largest crypto exchange, last year introduced zero-fee trading on a number of market pairs. That helped it gain more than 20% in market share, according to Kaiko. But in March of this year, the exchange halted that offer for 13 Bitcoin trading pairs (though it still allows it for Bitcoin-TrueUSD, which now makes up the largest Bitcoin trading pair).
Since Binance stopped its zero-fee trading program, there’s been a sharp drop-off in daily Bitcoin volume. And other developments have weighed too.
“Liquidity is draining across markets and it’s going to show up the most in the most volatile asset classes that rely on liquidity the most,” Matt Miskin, co-chief investment strategist at John Hancock Investment Management, said in a call. “And cryptocurrencies are a place where liquidity is a huge factor. That’s something that could spell weakness for crypto as the year goes along.”
Noelle Acheson, author of the “Crypto Is Macro Now” newsletter, agrees that weekend volumes have dropped off since the closure of SEN, “highlighting how crucial payment rails are for the functioning of a market.”
Still, she added that it’s notable that “weekend volumes are still as high as they are, suggesting a meaningful demand for weekend trading despite the removal of a key transfer network.”
“This 24/7 characteristic of crypto markets, which emerged spontaneously with the early exchanges, will add fuel to the debate around the trade-off between greater agility with always-on markets, and a better work-life balance with an enforced break,” Acheson said.
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