Despite 24/7 Trading: Bitcoin Investors are Taking off for the Weekend on Friday Already

By Dimitri Speck

Crypto-Statistics

In the last issue of Seasonal Insights I have discussed how the S&P 500 Index performs on individual days of the week. In this issue I will show an analysis of the average cumulative annual returns of bitcoin on individual days of the week.

Bitcoin, daily. While this is beside the point, we note the crypto-currency (and other “alt coins” as well) has minor performance issues lately. The white line indicates important lateral support, but this looks to us like it could be the beginning of a higher degree correction, mainly because it so far proceeds with greater verve than previous corrections over the past year. Besides, the recent rally in this trading sardine seems rather stretched, and the term stretched by itself actually sounds a bit inadequate as a descriptor. It needs an adverb… insanely might do. [PT] – click to enlarge.

It seems to me that bitcoin is particularly interesting for this type of study: it exhibits spectacular price gains, its is a very new instrument and it is unregulated. Moreover, it trades around the clock, even on weekends.

Given this setup, I found myself wondering: do prices rise uniformly? And does their performance on weekends differ from that on workdays?

Bitcoin: the Action Mainly Takes Place at the Beginning of the Week

The first chart below shows the annualized performance of bitcoin since 2011 in black, as well as the cumulative annualized performance on individual days of the week in blue.

Note: due to the extent of the rally to date, the compounding effect is particularly strong; the average cumulative returns achieved on individual days of the week therefore don’t add up linearly to the total annualized return of bitcoin. I have inserted a break in the black column and the scale of the y-axis in order to improve the clarity of the chart.

Bitcoin, performance by individual days of the week, 2011 to 2017. On Fridays and Saturdays the average gain in bitcoin was negligible.

As the chart shows, the beginning of the week is standing out quite noticeably: if one had invested exclusively on Mondays, an annual return of 39.30 percent would have been attained. The cumulative gain achieved on Tuesdays was even stronger at 59.68 percent.

By contrast, the average return of 0.56% achieved on Friday was essentially irrelevant. In short, even in bitcoin there were days of the week which on average generated almost no gain. Moreover, Saturdays, and by the standards of bitcoin also Sundays and Wednesdays, were rather boring days as well.

The difference in the average annual returns achieved on individual days of the week – measured over no less than 2,333 trading days – is quite significant. This suggests that it is highly unlikely to be a random pattern.

Next we will take a look at the evolution of these trends over time in detail.

The Days of the Week Under the Microscope

The next chart shows the performance of bitcoin since 2011 in black, as well as the cumulative return achieved on …read more

Source:: Acting Man

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