Since its inception, a spot Bitcoin exchange-traded fund (ETF) has displayed a noteworthy shift in its daily gains, with a significant portion occurring outside of U.S. trading hours, potentially offering lucrative opportunities for traders, according to an analyst. Markus Thielen, CEO of research firm 10x Research, highlighted this emerging trend, suggesting that investors could capitalize on these fluctuations to realize incremental profits. He noted that this departure from previous patterns, where gains were predominantly concentrated during U.S. trading sessions, opens up avenues for traders to strategically buy Bitcoin before U.S. market hours and sell it later for potential gains.
On April 4, for instance, Bitcoin experienced a 2.6% increase outside of U.S. trading hours, contrasting with a mere 0.6% rise during U.S. trading hours. Eric Balchunas, an ETF analyst at Bloomberg, echoed similar observations, emphasizing the significance of activities occurring beyond traditional U.S. trading times, which span from 2:30 PM to 9:00 PM UTC. Thielen further elaborated that investors, including those from different time zones, often initiate Bitcoin purchases before the market opens, anticipating a surge in ETF inflows, thereby driving up the cryptocurrency's price.
Analyzing data trends, Thielen pointed out that Bitcoin typically exhibits upward movements 1-4 hours prior to the commencement of U.S. ETF trading sessions, hinting at potential front-running activities in response to ETF flows. For instance, on April 4, Bitcoin registered a 2.6% uptick in the hours leading up to U.S. market openings, climbing from $65,593 to $67,308. However, Thielen also noted that U.S. investors commonly leverage market price differentials between spot and futures markets to their advantage, engaging primarily in arbitrage activities during U.S. trading sessions.
This observation isn't unprecedented, as similar instances have occurred previously. In June 2022, two ETF funds, NightShares 500 ETF and NightShares 2000 (NIWM), were launched to capitalize on overnight surges in U.S. stocks. However, these products were discontinued after a year, potentially due to other factors such as out-of-hours announcements and data releases affecting performance. Before the advent of the spot Bitcoin ETF, Asian investors were typically associated with more selling during Asian market hours, contrasting with the buying support from investors in the U.S. and the European Union. Nonetheless, recent trends suggest a shifting landscape, with U.S. and European investors demonstrating greater buying support in the cryptocurrency market.
