Bitcoin’s trading dynamics have seen a notable shift following the introduction of spot Bitcoin ETFs in the United States, reversing a longstanding trend where the majority of gains occurred during U.S. trading hours. Markus Thielen of digital research firm 10x Research and Bloomberg ETF analyst Eric Balchunas highlight this new pattern, presenting a strategic opportunity for traders to capitalize on.
The Shift in Bitcoin’s Trading Hours
Historically, Bitcoin often experienced dips during Asia trading hours, with significant gains typically concentrated within U.S. trading hours. However, since the launch of spot Bitcoin ETFs on January 11, a substantial portion of Bitcoin’s gains have been realized outside the traditional U.S. market hours, which run from 2.30 pm to 9 pm UTC.
On April 4, for instance, Bitcoin rallied by approximately 2.6% outside U.S. hours, compared to a modest 0.6% increase during the U.S. trading session. This trend suggests a new opportunity for traders to buy Bitcoin ahead of the U.S. trading hours and sell a few hours later to secure frequent, albeit small, profit margins.
Analyzing the Trend
Thielen explains that this phenomenon can be attributed to investors, including those from different time zones, anticipating surges in ETF inflows by purchasing Bitcoin before the U.S. markets open. He notes a pattern where Bitcoin tends to rise in the hours leading up to the trading day, likely due to front running of ETF flows.
Moreover, Thielen observes that U.S. investors appear to engage in arbitrage by buying Bitcoin Spot ETFs and simultaneously selling CME-listed Bitcoin futures, exploiting the market spread between the spot and futures markets.
A Historical Perspective
This pattern of gains outside U.S. trading hours is not unique to Bitcoin. In June 2022, ETF funds like the NightShares 500 ETF and NightShares 2000 (NIWM) were launched to capitalize on overnight increases in U.S. stocks. However, these products were discontinued a year later, underscoring the complexity of trading based on time-specific patterns and the influence of external factors such as off-hours announcements and earnings reports.
Prior to the spot Bitcoin ETFs’ debut, the consensus was that Asian investors were more inclined to sell during Asian market hours. A report by Cointelegraph in March 2022 highlighted the contrasting behaviors of investors across different regions, with Asian markets generally exerting heavy selling pressure, while U.S. and European investors provided bid support.
