Recent data shows that the best time to buy Bitcoin (BTC) is on Sunday night, according to Capriole’s digital asset manager, Charles Edwards. As shown below, historically, BTC saw higher returns on Sunday nights until Monday morning.
Bitcoin shows higher returns on Sunday evenings
„Bored Sunday midnight? It happens to be the best time to buy Bitcoin.“
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There are several reasons why Bitcoin might work better as the weekend ends. First, the weekend usually records a lower volume, which increases the chances of high volatility.
Second, the traditional markets that facilitate Bitcoin trading, such as CME, close over the weekend. As they open, it could cause an increase in volatility.
The reduction in BTC trading volume and the closure of CMEs are possible reasons
Over the weekend, as traditional markets close, the trading volume on Bitcoin exchanges also tends to decrease. When there are fewer active traders in the market, it leaves the market vulnerable to more volatile price action.
As an example, on July 25 and 26, the BTC/USDT pair at Binance recorded a daily volume of 40,000 BTC and 65,000 BTC respectively. Then on July 27, which was a Monday, the volume rose sharply to 150,000 BTC. Coincidentally, the price of Bitcoin also increased by 11%.
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BTC-USD price and volume surge on Monday, July 27
Due to the low volume of Bitcoin trading over the weekend, BTC also tends to see sudden reversals. For example, on Sunday, August 2, the BTC price dropped sharply by 6% overnight. This led to a volume spike, offsetting the data mentioned above.
The CME Bitcoin futures market and its weekend closing may also be impacting the strong performance of Bitcoin on Mondays. Similar to the U.S. stock market, CME closes its markets over the weekend and on national holidays.
Accredited and institutional investors using CME’s Bitcoin futures market have to wait until the market opens on Monday.
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Unlike traditional assets, BTC is traded during the weekend and holidays on the exchanges. Therefore, when BTC closes and opens on a Monday, there is usually a price gap.
The filling of the CME gap is a widely recognized theory within the cryptomoney market. The data shows that the Bitcoin exchange market generally moves to fill the gap between CME’s and the rest of the market. Consequently, after a weekend, Bitcoin often sees a significant price action.