Bitcoin (BTC) has witnessed a shift in its daily gains, with most of the profits now occurring outside of U.S. trading hours since the launch of spot Bitcoin exchange-traded funds (ETFs). This change presents a potential opportunity for traders, according to an analyst. This new trend allows investors to take advantage of small profit margins that occur frequently. Markus Thielen, the CEO of research firm 10x Research, suggests that traders can buy Bitcoin before U.S. trading hours and sell it a few hours later to capitalize on this trend.
On April 4, Bitcoin experienced a rally of approximately 2.6% outside of U.S. trading hours, while prices only rose around 0.6% during U.S. hours. Bloomberg ETF analyst Eric Balchunas also noted that the majority of the 40% gains in Bitcoin since the introduction of spot Bitcoin ETFs occurred outside regular U.S. market trading hours.
U.S. trading hours refer to the operating hours of the New York Stock Exchange (NYSE) and Nasdaq stock exchange, which run from 2:30 pm to 9:00 pm UTC.
At the time of publication, Bitcoin is currently trading at $68,400, with a 64% growth reported during the first quarter of 2024.
Thielen explained that investors, including those from different time zones, often anticipate surges in ETF inflows by buying Bitcoin before the market opens. He stated, “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.” On April 4, Bitcoin experienced a slight 2.6% rise in the four hours before the opening of the U.S. market.
However, Thielen noted that U.S. investors tend to take advantage of the market spread between the spot market and the futures market. He stated, “The buying flow during US trading hours appears mostly arbitrage – buying Bitcoin Spot ETFs but selling CME-listed Bitcoin futures as hedge funds pocketed the futures premium.”
This shift in daily gains during non-U.S. trading hours is not unprecedented. In June 2022, two ETF funds, the NightShares 500 ETF and the NightShares 2000 (NIWM), were launched to take advantage of overnight increases in U.S. stocks. These products were discontinued a year later due to other factors, such as off-hours announcements, data releases, and earnings reports, which could diminish performance.
Before the introduction of spot Bitcoin ETFs, it was understood that Asian investors were more active in selling during Asian market hours. However, in recent years, U.S. and European investors have provided bid support, while Asian markets have generally offered lower buying support and produced selling pressure.
Please note that this article does not provide investment advice or recommendations. Readers should conduct their own research and analysis before making any investment or trading decisions.