When does crypto trade?
Cryptocurrency trades 24 hours a day, 7 days a week since it’s independent of centralized finance. For better or worse, the action is non-stop. Since cryptocurrency does not belong to any one exchange- not Hong Kong or Shanghai, Tokyo, London or New York- there are no hours when the network is “offline.” Since one of the many use cases of crypto is that it must be a medium of exchange (money) the networks that run crypto have to be up constantly.
Just because there is no official open and close doesn’t mean that the volume of trading of all cryptocurrencies does not have gigantic fluctuations throughout the day. As we’ve seen over the past few months, more and more stock-market listed ETFs, trusts, and other vehicles for investing in cryptocurrency have been coming online. In the US alone, over $22 trillion is locked up in retirement accounts like 401ks and Roth IRAs. Additionally, as ETFs and other funds get the green light from regulators we’re going to see huge influxes of capital into cryptocurrencies. Yes, this has huge implications for the prices of coins. You may ask- so what? Well, nearly 90% of cryptocurrency holdings belong to institutional investors, a figure that I think may even increase more. Many of the funds held by these institutions only trade during market hours in North America, Europe, or East Asia. An example of this would be the Grayscale Ethereum Trust or Grayscale Bitcoin Trust, which together are worth over $10 billion.
Big moves at market opens
Let’s keep using that Grayscale Bitcoin Trust as an example. If you’re unfamiliar, GBTC allows you to ‘invest’ in Bitcoin without actually holding the coins in storage- much like the purchase of coins on Coinbase or Binance. GBTC only trades during US stock market hours (9:30am-4:00pm US Eastern). Because the prices of cryptos fluctuate between 4pm at the end of one day and 9:30am at the start of the next day, there are huge amounts of buy and sell orders upon market open depending on whether the price has risen or dropped- or if some new information that may affect Bitcoin’s future price has come out. The below chart shows the swell in variance (an indicator of volume) as the European, US, and Asian markets open at the beginning of their days.
Why crypto always has to be online
Cryptocurrencies (to date) have three main functions: to act as stores of value (like gold), to act as mediums of exchange (like money) and to act as verifiers and intermediaries of transactions (like real estate brokers, lawyers, and bank tellers). Since crypto needs to provide the capability of money, it needs to be online all the time- money never sleeps, right? Millions of transactions are being made every second across the globe.
Why crypto will always be ‘up’ no matter what
This is one of the huge value propositions of cryptocurrency- its networks are decentralized. You may recall a period in your life when a favorite website of yours was down, or some network wasn’t working at your place of employment. Those entities were offline and nonfunctional for that time period- but this will never happen with any good cryptocurrency. This is one of the main selling points of crypto- since the network is decentralized (meaning the network is millions of computing nodes across the globe) it will never be ‘down’ or not working. These facts also contribute to the point that you can’t ban crypto. To get rid of cryptocurrencies, you’d have to shut down the internet worldwide. Some nation-states like China have been trying to ban cryptocurrency since 2017. If the government of a country of 1.4 billion people with trillions of dollars at its disposal can’t get rid of crypto, I don’t know what can.
The downside of cryptocurrency’s unlimited trading hours
Personally, I find myself checking CoinStats (a fantastic app that tracks all of your coin holdings across wallets and exchanges) more than 50 times a day. I’ve had episodes where I awake at 3am only to pick up my iPhone and check prices, which often sends my heart racing (newsflash: crypto investing has a lot of drama) and I can’t get back to sleep. At least the US stock market where I hold most of my retirement money is closed on weekends and holidays like Christmas where I’m with my family. This is something I’m trying to get better about, since I call myself a buy and hold long-term investor. Something I have to be careful about is the gambling-like speculation that comes with crypto investing, where I’m chasing the dopamine hits I get after seeing increases in price. I’m in crypto for the long haul, always have been- because I believe in blockchain’s ability to solve some of our most pressing issues, and even solve some issues we may not even know we have yet.
Cryptocurrency exchanges and trading are convenient
Coinbase, Kraken, Binance, KuCoin, and others have all figured out how to give their users a high quality mobile UX. The wonderful thing about blockchain tech always being on is that you have the ability to buy and sell crypto whenever you’d like, and whenever you have the time. You don’t have to worry about high-frequency traders or institutional investors getting their orders in before yours when the market opens- when you make the decision to buy or sell, you can do so immediately. It is because of this and many other reasons that blockchain will continue its relentless march toward global adoption.