The Weekend Dip in Bitcoin Prices
Yes, it’s a real thing.
Here’s my logic:
These are the assumptions:
— Banks don’t work on weekends.
— When fiat (£/$/whatever) is deposited in — on a weekday — the trader in question *will* trade their money almost immediately.
Therefore…
— On the weekend, the trader in question won’t be able to trade their fiat for BTC because they don’t have any fiat in their exchange account.
— So the trader decides to sell some of his bitcoin to free up more fiat to trade with. Many traders do this (perhaps causing a feedback loop) in quick succession, dropping the price over the weekend.
— Come Monday/Tuesday, money has been deposited in exchange accounts from banks and trade picks up again.
— By Wednesday and slower banks have deposited fiat funds into trader’s exchange accounts. On that day we see lots of trading due to this new-found liquidity and lots of enthusiasm as people start buying again.
Check out the above graph of the Change of Bitcoin Number of Transactions Excluding Popular Addresses over the last 3 months or so. There are a few anomalous data points, but that’s because of some major event happening on the day.
Another thing! Check this one out of the Change in Market price (orange) with the Change in Bitcoin Number of Transactions Excluding Popular Addresses (green). Increases in market prices tend to coincide with increases in transactions — i.e. when normal users frenzy, the price tends to increase and when they are comparatively sedate, and have the urge, as mentioned above, to change to fiat, the price falls. There’s more to be said here, but I’ll leave further elaboration to you, the reader.
I’ll leave one last explanation. Why am I using Transactions w/out popular addresses? Because I believe the most popular ones are gambling sites/exchanges/pools and obfuscate the actual movements of traders (Also, I believe that the vast majority of bitcoin transactions are for financial gain because let’s face it, the typical layman bitcoin transaction is for market trading rather than payment).
Goodnight and happy weekend!
P.S. I proposed this idea with my friend nearly a month and a half ago (although I know enthusiasts have speculated about it before) I think, at the time, we had seen drops on the Friday which made me wonder whether Fridays were in fact effectively weekends for the typical layman trader.
