What is the state of the digital currency market during the holidays?



Many people find that the volume of digital currency exchange transactions decreases on weekends compared to other days of the week; But to what extent is this opinion true? And does the reduction in the volume of trading at the end of the week mean a reduction in the net volume of bitcoin inflows to the stock exchanges?

The fact is that the volume of bitcoin transactions in exchange offices is declining more than expected on weekends; But these days, despite the decline, the net amount of bitcoins entering the exchanges is either fixed or slightly increasing. This model is fixed in all bitcoin supercars and bear and cow markets.

Given that trading on exchanges requires the introduction of bitcoins in them, some may expect that the low volume of transactions on weekends will mean a reduction in the ratio of entry to exit of bitcoins in exchanges. If so, such a link may be important for those traders and investors who use these indicators as a signal for future price changes.

In this regard, and with the help of an article on The Block’s website, we devoted this article to examining the volume of weekend exchange trading, the size of bitcoin inflows these days, and the relationship between these two variables. Stay with us.

Data and research method

In the previous section, we mentioned that the purpose of writing this article is to look at bitcoin transactions on weekends, or Investigate the “weekend effect” on bitcoin trading f. To study the effect of weekends on bitcoin transactions, historical data related to the daily volume of bitcoin transactions (amount of money transferred between currency pairs to bitcoin) and net daily flow (difference between bitcoin inflows and outflows in exchange portfolios) were analyzed and reviewed.

Data from this analysis were extracted from 7 major exchange offices, from 1 December 2017 (4 December 1996) to 24 August 2021 (2 September 1400) with a sample size of 1454 transactions. It is worth mentioning that the data related to the trading volume of the Hobby Exchange were available only from January 18, 2018 (December 28, 1996) to August 24, 2021.

The price of bitcoin is shown in dollars. In the case of trade volume and net flow data, positions up to three standard deviations from the total average were excluded on all exchanges.

In addition to descriptive statistics, inference statistics and statistical hypothesis testing were used to determine whether weekend statistical differences were valid and aggregated, or insignificant and insignificant numerical differences. It should be noted that descriptive statistics are a type of statistics that independently examines and describes the characteristics of a collection and its results cannot be summarized for other collections; Differential statistics, on the other hand, examine the ability to summarize the characteristics of a smaller statistical community to larger communities.

Finally, all these analyzes were performed separately for the whole period, for the two observed supercycles (before May 2020 compared to May 2020) and for the bear and cattle markets (January 2018 to January 2019 compared to on other days). You can see the results of these analyzes in the following sections.

Weekend differences in bitcoin trading volume

First, we look at historical data on trade volume. The chart below compares the average volume of bitcoin transactions on normal days of the week with weekends on different exchanges.

Take a closer look at the state of bitcoin transactions on weekends

A study of the appearance of this chart shows that in all surveyed exchanges the volume of bitcoin transactions on weekends is slightly lower than on normal days; But to find out if the difference between the average trading volume on normal days and weekends is significant, the Wlech t-test was used.

Unlike Student’s t-test, Welch’s t-test also takes into account the deviation of unequal criteria between weekly and weekend samples.

As you can see in the table below, with the exception of the Bainance and Hobby exchanges, the effect of the weekend on trading volume is statistically significant in all exchanges.

You can see the exchanges whose difference between the averages of the two statistical aggregates is significant, with the sign * next to their number p.

Take a closer look at the state of bitcoin transactions on weekends

To take a closer look at the effectiveness of the weekend effect, we can use the Cohen effect. The Cohen effect d shows the standard difference between the two means. Traditionally, if the absolute value of the effect d is equal to 0.2, we consider it small, if it is equal to 0.5, we consider it medium, and if it is equal to 0.8, we consider it large.

In the samples we studied, the effect of d ranged from a minimum of -0.15 for Bitfinx exchange to a maximum of -0.40 for Gemini exchange; Therefore, it can be considered as a range from small to small and medium size of the effect. The total amount of the effect in the total exchange is -0.15; Which shows a small overall decline in the volume of trade over the weekend.

These results show that on smaller exchanges such as Bitstamp and Gemini, the volume of weekend transactions is slightly lower than on normal days. However, in larger exchanges such as Bainance and Hobby, the wide range of changes in the difference between trading volume on normal days and weekends on different weeks makes the difference in trading volume insignificant.

However, additional analysis shows that the effect of the weekend on the Bainance exchange during the third supercycle (d = -0.29) is greater than the fourth supercycle (d = -0.19), and in bear markets (d = -0) , 42) is larger than bullish markets (d = -0.11). This model is repeated in the trading volume of general exchanges; That is, the total volume of trading on all exchanges during the third supercycle (d = -0.41) is greater than the fourth supercycle (d = -0.21), and in bear markets (d = -0.40) is larger than the cattle markets (d = -0.15).

Note, however, that the sample size is relatively small for the normal days of the week in the fourth supercycle (n = 133) and bear markets (n = 114). We therefore warn you to be careful when interpreting these results.

Differences between weekends during bitcoin exchange

Then we check whether the net volume of incoming bitcoins to the exchanges reflects the volume of transactions. The chart below shows the average net flow of bitcoins on normal days of the week compared to weekends, between September 2017 and August 2021 on each of the surveyed exchanges.

Take a closer look at the state of bitcoin transactions on weekends

A review of the appearance of this chart shows that the average net flow in some exchanges (including Bainance) on weekends is lower than on normal days; But in some other exchanges the opposite is true. It is therefore necessary to examine whether this difference in averages can be validly summarized. In this way, the effect (or inefficiency) of the weekend effect on the net flow of exchanges can be seen.

The results of the Welch test t together with the d Cohen effect are shown in the table below.

The results are different; But what is clear is that the daily net flow of bitcoins does not reflect the volume of daily transactions. In general, the net inflow of bitcoins to the stock exchanges at the end of the week is more than the normal days of the week. However, the volume of bitcoin transactions on weekends is less than normal days.

The effect of the weekend is statistically significant only for the Hobby and Bitstamp exchanges. This effect is positive in both exchanges; This means that the net flow over the weekend is higher than the normal days of the week.

Take a closer look at the state of bitcoin transactions on weekends

Where the effect of the week is significant, the effect of Cohen d shows a small but long-lasting effect (0.12 to 0.15). The net flow of bitcoins on the Hobby and Bitstamp exchanges and the total exchange on weekends is more than normal days. By combining deviations from large criteria, it can be concluded that the net flow of bitcoins Average Weekends are slightly higher than normal days of the week; But this difference is very different in different weeks.

If we look at the differences based on supercycles and market conditions, we see that the effect of the weekend in the third supercycle (d = 0.06) is less than in the fourth supercycle (d = 0.26) and in the bear market. , 12) is smaller than the market Cow is (d = 0.20); This is in contrast to what we saw in the trade volume data.

Here again, we warn you to be careful when interpreting the results; Because the sample size of the fourth superbike and bear market is relatively small.

Conclusion

People seem to trade less on weekdays than on normal days; But the difference in the volume of trade is small and strongly depends on the size of the stock market, super cycles and market conditions. Also, changes in the volume of bitcoin trading over the weekend are usually not directly related to changes in bitcoin inflows and outflows to the stock exchanges over the weekend.

It should also be noted that the Bainance Exchange behaves differently among the surveyed exchanges. Bainance, in addition to being the largest long-distance exchange in terms of trading volume, does not significantly reduce the volume of bitcoin trading on weekends like other exchanges. In addition, despite the fact that the net volume of bitcoin flows on weekends increases significantly compared to normal days on other exchanges, it remains either constant or decreases in the binance exchange.

These findings may come as a surprise; This is because it is generally believed that reducing the volume of bitcoin transactions over the weekend will reduce the net flow of this digital currency in exchange offices. One possible reason for this is that traders save bitcoins on the weekends to be ready for weekly trading. Therefore, the net flow of bitcoins remains constant or even increases over the weekend. That is, while its trading volume increases on normal days of the week.

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