Price volatility is one of the major reasons why cryptocurrencies are criticised across the world. Late in May, HSBC, Europe’s biggest investment bank, said it has no plans to offer digital coins as an investment as they are “too volatile”.
Nothing unites cryptocurrency opponents like its volatility. But some analysts have observed an unusual trend: Cryptocurrency crashes tend to happen on weekends.
It is on Saturdays and Sundays when most of the asset classes are on holiday mode, that crypto volatility spikes.
This phenomenon has been observed in the crypto market for several years now, Stephen McKeon, a finance professor and partner at Collab+Currency, a crypto-focused investment fund told CNBC.
Liquidity requires a steady supply of both buyers and sellers. If there are fewer buyers than sellers or vice versa, transactions become harder – a situation that results in a spike or crash.
“People always tout Bitcoin as 24/7,365 liquidity, but what actually means is you have periods of very thin liquidity,” Nic Carter, partner at crypto venture firm Castle Island Ventures told Bloomberg.
