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Cryptocurrencies Are Exerting Pressure on Traditional Markets 24/7

  • There is growing pressure on Wall Street to emulate at least some of the characteristics of crypto trading and one of them is opening hours.
  • The 24/7 nature of cryptocurrency markets could also be a function of their volatility, which demand the ability to exit and enter positions immediately.
While there remains a healthy skepticism in traditional financial circles when it comes to cryptocurrencies, one area where the digital realm is putting pressure on Wall Street is in terms of operating hours.
Because the cryptocurrency markets never sleep, that 24/7 availability is pushing traders of traditional assets to work longer hours, in a reversal of a pre-pandemic campaign by banks and fund managers to shorten opening house at exchanges.
With some pension funds following family offices and hedge funds into the risky realm of cryptocurrencies and even Bank of America acknowledging that the sector was not too big to ignore, there is growing pressure on Wall Street to emulate at least some of the characteristics of crypto trading and one of them is opening hours.
In early October, Bermuda-registered cryptocurrency and currency trading platform 24 Exchange filed an application with the U.S. Securities and Exchange Commission for al license to run a national securities exchange, in a bid to become the first forum where securities can be traded 365 days a year.
Part of the pressure also comes from retail traders, in the wake of the pandemic where lockdowns saw many become day traders who reverted to crypto trading when traditional markets were closed.
In an increasingly digital world and 2-hour delivery times, the expectation of instant gratification is putting pressure on traditional bourses to keep their doors open 24/7.
Although cryptocurrencies are available for trading any time during the day, stock exchanges only allow trading during set hours five days a week and currency trading pauses for the weekend, in a nod to the human element in finance.
And while longer hours are unlikely to be welcome by professional traders who say that the existing regime is already punishing, it could provide opportunities for quant traders who use algorithms and computer programs to trade the markets with limited human intervention.
Many cryptocurrency traders already rely on sophisticated algorithms and bots to trade intraday volatility or based on observable flow patterns, to ensure that they can step away from their terminals.
But automated trading is not yet the norm in the cryptocurrency markets, with digital asset custodian Copper reporting that the majority of cryptocurrency trading still happens during the week in market hours, with just 35% of transactions taking place on the weekends and outside normal office hours.
The 24/7 nature of cryptocurrency markets could also be a function of their volatility, which demand the ability to exit and enter positions immediately.
By contrast, currency and equity markets are much sleepier on the whole and except for extraordinary circumstances, few events would trigger the sort of price moves that have become common for cryptocurrencies.
Nonetheless, as cryptocurrencies mature, volatility may decrease as well, but the markets will remain open for traders to ply their business in and it’s perhaps just a matter of time before other bourses take their cue from the digital asset industry.

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