Those who watch crypto charts closely may know that a hypothetical strategy of buying Bitcoin at the close and selling it at the next open has historically generated large returns. Yet recent weeks have seen him take a hit.
Those who A close look at crypto charts might be familiar with the fact that a hypothetical strategy of buying Bitcoin at the close and selling it at the next open has historically generated big returns. Yet recent weeks have seen him take a hit.
Unlike the so-called after-hours strategy, i.e. buying at the open and selling at the WE market close, has outperformed over the past month, according to Jake Gordon of Bespoke Investment Group. That hasn’t always been the case, with the bulk of the gains typically coming outside of normal US trading hours, a phenomenon market watchers have long watched and puzzled over.
“Bitcoin’s price action and Ethereum moved from intraday weakness earlier this year to intraday strength,” Gordon wrote in a Remark. He added that it’s hard to say why this might be happening, although the recent deluge of news stories emerging overnight may have something to do with it.
For years, crypto investors have been fascinated by how Bitcoin and other digital assets are influenced by news flow or dwindling liquidity while US markets – and traders – are closed and asleep. Bespoke had previously found that Bitcoin largely tends to rise on weekends when the stock market is closed, but Monday through Friday it trades flat before US stock markets open, but drops as soon as trading begins.
The fact that the longstanding strategy has now lost some of its luster is remarkable. In part, this could be because news flow has been heavy in recent weeks amid issues from different crypto companies, including hedge funds and lenders.
“It tells me there’s still a lot of bad news to come,” said Matt Maley, chief market strategist at Miller Tabak. “Those making the announcements know that the crypto market is so fragile that they make all the announcements when the US markets are closed.”
Yet the strategy of holding the coin only overnight would have generated a 134% gain since the end of 2019 on Friday, according to Bespoke, while buying the open and selling the close generates a yield of 9%.