The weekend effect on the bitcoin market: does it exist?

Bitcoin is believed to be more prone to decline on weekends than any other day of the week. There are several logical explanations for this theory:

  • They trade less on weekends. As a result, the liquidity of the market falls, due to which the risks of sharp movements increase;
  • Short-term traders love to take profits at the end of the week. By closing positions, they cause the market to decline;
  • The Whales love to rock the market over the weekend;
  • Institutional buyers take a break at the weekend and can’t support the price.

Ecoinometrics analysts decided to find out if these claims are justified or the market is statistically declining on any weekday as well as on the weekend. To do this, they collected information about the opening and closing of daily candles according to universal time since the first halving. In the image below, the gray dots represent the return on investment over one day, and the red vertical lines represent the median of each distribution. The density of distribution was also highlighted in color – from lighter (lighter tones) to thicker (darker tones). The allocations are in reverse order, that is, from Sunday to Monday.

As shown in the image, the returns are almost the same for all days of the week. In addition, there were even fewer outliers on weekends than on other days.

Ecoinometrics analysts also looked at the issue from a different perspective, estimating the percentage distance from the candlestick’s open level to its lowest point. They suggested that the price may drop lower on some days, but then retrace. For clarity, Ecoinometrics introduced quartiles – red vertical lines that divide the sample into four groups containing approximately equal numbers of observations.

It turned out that the situation is the same here. The first three quartiles are approximately at the same distance, and the last one, which advises extreme price deviations, was even closer to zero over the weekend. The most volatile days in this regard were Wednesday, Thursday and Friday.

Thus, the theory of the weekend effect was disproved. Analysts say they got about the same results when they made calculations after each separate halving, that is, there were no significant changes in the distribution of volatility in the Bitcoin market by day of the week over time.

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