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Cryptocurrency is known for volatility and some experts say crashes tend to happen on weekends.
“This has been a phenomenon in crypto for several years,” said Stephen McKeon, associate professor of finance at the University of Oregon in Eugene, and partner at Collab+Currency, a cryptocurrency-focused investment fund.
These weekend dips may have significant effects as regulators weigh the future of digital currency, experts say. Here’s why these crashes may be happening.
Less trading on weekends
One of the reasons for weekend cryptocurrency volatility is there are fewer trades, said Amin Shams, assistant professor of finance at Ohio State University in Columbus, Ohio.
“When the volume is low, the same trade size can move prices a lot more,” he said.
With banks closed over the weekend, there is less trading because investors may not be able to add money to their accounts, McKeon said.
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“You get moments of market panic where there’s a lot of selling pressure,” he said.
Typically, there’s a rebound on Sunday night as Asian banks open and into Monday as U.S. banks follow, McKeon said.