Bitcoin has seen most of its daily gains come outside United States trading hours ever since the launch of spot Bitcoin exchange-traded funds (ETFs), which could present an opportunity for traders, according to an analyst.
The trend is a seeming reversal from the last two years, where most gains were concentrated during U.S. trading hours. Research firm 10x Research CEO Markus Thielen suggests the new trend allows investors to capitalize on frequent small profit margins.
“Traders can take advantage of this information and buy Bitcoin ahead of the U.S. trading hours and sell a few hours later,” Thielen told Cointelegraph.
On April 4, Bitcoin rallied approximately 2.6% outside U.S. hours, while prices only rose around 0.6% during U.S. hours.
Bloomberg ETF analyst Eric Balchunas also noted in an April 5 post on X that “the vast majority of the 40% gains” in Bitcoin since spot Bitcoin ETFs were introduced on Jan. 11 happened outside regular U.S. market trading hours.
U.S. trading hours are the operating hours of the New York Stock Exchange (NYSE) and Nasdaq stock exchange, running from 2:30 pm to 9:00 pm UTC.
At the time of publication, Bitcoin is currently trading at $68,400 with Cointelegraph recently reporting a 64% growth in Bitcoin during the first quarter of 2024.
Buying Bitcoin before market open
Thielen explained that investors, including those from other time zones, often anticipate surges in ETF inflows by buying Bitcoin before the market opens:
“We also noticed through our data analysis that Bitcoin tends to rise during the 1-4 hours before U.S. ETFs start trading on that day, a sign that there is likely front running of the ETF flow occurring,” he added.
On April 4, Bitcoin experienced a slight 2.6% rise in the four hours before the opening of the U.S. market, climbing from $65,593 to $67,308.
However, Thielen noted that U.S. investors tend to take advantage of the market spread between the spot market and the futures market:
“The buying flow during US trading hours appears mostly arbitrage – buying Bitcoin Spot ETFs but selling CME-listed Bitcoin futures as hedge funds pocked the futures premium,” Thielen stated.
It’s not the first time an asset has been singled out for gains outside U.S. trading hours. In June 2022, two ETF funds, the NightShares 500 ETF and the NightShares 2000 (NIWM), were launched to take advantage of the overnight increases in U.S. stocks.
According to a report from the Financial Post in July 2023, the products were discontinued just one year later because other factors, such as off-hours announcements, data releases and earnings reports, can diminish performance.
Before the introduction of spot Bitcoin ETFs, it was understood that Asian investors did more of the selling during Asian market hours.
In March 2022, Cointelegraph reported that investors based in Asia have generally been sellers, while those in the U.S. and the European Union have been buyers for the previous two years.
Glassnode researcher and report writer “Checkmate” pointed out that U.S. and European investors offered general bid support for the past two years. However, Asian markets generally offered lower buying support through Q1–Q3 of 2021 and produced heavy selling pressure.