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Asian Crypto Traders Turn Bullish After Bitcoin ETF Approval

Bitcoin gains shift to non-US trading hours after spot ETF launch

Bitcoin's trading landscape has experienced a notable shift with the emergence of spot Bitcoin ETFs, particularly in terms of trading gains occurring outside of U.S. trading hours. This shift presents intriguing prospects for traders to capitalize on small profit margins.

According to Markus Thielen, a digital research analyst at 10x Research, the trend marks a significant departure from the previous two years, where the majority of gains were concentrated within U.S. trading hours. Thielen suggests that investors can leverage this new trend by strategically buying Bitcoin before U.S. trading hours and selling shortly thereafter.

Thielen stated: 

"Traders can take advantage of this information and buy Bitcoin ahead of the US trading hours and sell a few hours later."

Recent data supports Thielen's observation, with Bitcoin rallying approximately 2.6% outside U.S. hours on April 4, compared to a mere 0.6% increase during U.S. trading hours.

Eric Balchunas, an ETF analyst at Bloomberg, echoed similar sentiments, noting that a significant portion of Bitcoin's gains, approximately 40%, since the introduction of spot Bitcoin ETFs occurred outside regular U.S. market trading hours.

Investors anticipate ETF inflows by buying Bitcoin before US market opens

U.S. trading hours, which align with the operating hours of the New York Stock Exchange (NYSE) and Nasdaq stock exchange, typically run from 2:30 pm to 9 pm UTC. Thielen explained that investors worldwide often anticipate surges in ETF inflows by purchasing Bitcoin before the market opens.

Thielen elaborated:

"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," 

However, Thielen pointed out that U.S. investors tend to engage in arbitrage during trading hours, capitalizing on the spread between the spot market and futures market by buying Bitcoin Spot ETFs and selling CME-listed Bitcoin futures.

Previous trend reversal: Asian investors as sellers, US and EU as buyers

This phenomenon of assets exhibiting gains outside U.S. trading hours is not unprecedented. In 2022, two ETF funds, NightShares 500 ETF and NightShares 2000 (NIWM), were launched to exploit overnight increases in U.S. stocks. However, these products were discontinued a year later due to other factors diminishing their performance, such as off-hours announcements, data releases, and earnings reports.

Before the advent of spot Bitcoin ETFs, Asian investors were primarily responsible for selling during Asian market hours, while U.S. and EU investors were the primary buyers. However, recent trends indicate that U.S. and European investors have provided consistent bid support over the past two years, while Asian markets have exhibited lower buying support and exerted significant selling pressure.

In conclusion, the introduction of spot Bitcoin ETFs has reshaped Bitcoin's trading dynamics, with most gains now occurring outside traditional U.S. trading hours. This shift presents a unique opportunity for traders to capitalize on fluctuating market trends and profit from small margins.