It’s been a disastrous week for the crypto markets — with Bitcoin almost losing $80,000 support at one point. Many altcoins are nursing double-digit losses over a seven-day period too, including the likes of Hyperliquid and Zcash.
This weekend, something a little unusual has happened: a rally. BTC has surged back to $87,000, helping to lift up smaller digital assets in the process. Here, we’ll examine why Bitcoin is up — and whether the bullish surge is sustainable.
Firstly, it’s important to be wary of weekend pumps. If you look at Bitcoin’s chart over the past month or so, you’ll notice that it resembles a staircase gradually heading downwards… with the odd lull in between.
For the past few weeks, BTC has jumped up on Saturdays and Sundays — only to resume a brutal correction once the working week begins. There are several factors to bear in mind here.
Firstly, the crypto markets tend to suffer from dramatically lower levels of liquidity at the weekend. Exchange-traded funds on Wall Street tracking BTC’s spot price are closed, with institutional investors logging off for a much-needed break. This means Bitcoin is more susceptible to sudden price swings on low trading volumes.
Research published by Advances in Consumer Research in August noted that these volumes tend to be 20% to 25% lower at weekends — “creating a thinner market environment where momentum-driven trades can exert greater price impact.”
The study found that weekend momentum strategies “consistently outperform their weekday counterparts across all cryptocurrencies, with mean daily returns on weekends often doubling those on weekdays.” This effect is more pronounced among digital assets with a smaller market capitalization.
But while this might create a celebratory atmosphere, weekend pumps create problems. That’s because Bitcoin futures are traded on the Chicago Mercantile Exchange — and play a vital role in the price discovery process.
Futures markets close at the end of the working week — and as of 5pm New York time (10pm London) on Friday, BTC was worth $85,100. The 3% bump we’ve seen since is referred to as the “CME gap” — and more often than not, prices end up reverting back to where they were before.
This has led many on X to be exceedingly distrustful of Sunday surges, because they can end up being reversed in the blink of an eye.
Other Reasons Why Bitcoin is Up
Beyond the issue of tepid trading volumes — which will correct itself as stock markets in Asia, Europe and America come online throughout the day — there may be some one-off factors why Bitcoin is up.
One concerns the ongoing negotiations to end the war in Ukraine, with Donald Trump putting forward a pretty controversial 28-point peace plan. Over the weekend, negotiations have been taking place between delegates from the U.S. and Ukraine — and so far, those talks in Switzerland appear to have gone well.
Given Russia’s initial invasion sparked a sharp decline in the stock market, with commodities heading in the other direction, any prospect of a conclusion to the conflict could renew appetite for riskier assets.
Indeed, futures across the Dow Jones, S&P 500 and the tech-heavy Nasdaq 100 all rose on Monday morning as investors digested the news. Geopolitical developments may have contributed to the uptick, as well as the Federal Reserve leaving the option of an additional rate cut next month on the table.
In the short-term, Bitcoin will face challenges in its quest to head back above $90,000. For one, it’s Thanksgiving week in America. Wall Street will be closed altogether on Thursday and only open for a half-day on Friday, meaning that we’ll see a return to the thin trading volumes often experienced on weekends.
The next few days are shaping up to be make or break for bulls who continue to argue that Bitcoin’s correction is a temporary lull before we see another leg higher.
While BTC has just secured its first weekly close in green territory for four weeks, current quarterly losses of 23% mean the world’s biggest cryptocurrency remains on track for its worst end to the year since 2018. Reflecting on the weekend pump, popular X analyst @TedPillows wrote:
“We know what will happen next. Rather than trying to pump Bitcoin on weekends, bulls should bring some momentum during weekdays.”
The post Why Bitcoin is Up: Will Weekend Pump Last? appeared first on Cryptonews.
