Several people have noted that Bitcoin price tends to go down on the weekend and up during the week. That seems to fit with my own very small observational data set. Assuming that this is correct, I have a theory as to why:
1) New coin production occurs continuously on a more-or-less constant rate of 150 bitcoins per hour until the next halvening when it will be reduced to 75 bitcoins per hour. I suspect this is the primary source of bitcoins for new investor demand, except during rapid price surges.
2) Most mined bitcoins are sold for fiat at / near the time of their eligibility, in order to cover mining costs (electricity, salaries, ASICs etc.)
3) Most Bitcoin investment buyers (HODLers) purchase during the week and spend time with family, chores etc. on the weekend. The absence of buying demand from those HODLers on weekends can lead to a price drop as mined coins are continuously dropped onto the market.
4) Savvy traders are probably already aware of these patterns and use them to hoard / dishoard, helping to balance out supply and demand and dampening this pattern.
As an additional hypothesis, I bet that:
1) Price tends to increase on weekday mornings of the biggest Bitcoin buyers markets as many people make a decision to buy Bitcoin as an investment in the morning and execute their buys then. I have noticed a big spike in price that happens regularly in the evening here (morning for Chinese buyers).
In an ideal world these kinds of patterns would be arbitraged away. However the bitcoin to fiat marketplace is very imperfect as many are (quite justifiably!) unwilling to keep much bitcoin / fiat on the exchanges, and successfully trading on the exchanges does not mean that you will walk away with those winnings in the medium / long-term as BTC or even fiat balances outside of the exchange.
Now I just have to spend some time gathering exchange price data and see if they fit my casual observations. As for trading them - I'll leave that to others. My own bitcoins leave Coinbase as soon as they are eligible!
1) New coin production occurs continuously on a more-or-less constant rate of 150 bitcoins per hour until the next halvening when it will be reduced to 75 bitcoins per hour. I suspect this is the primary source of bitcoins for new investor demand, except during rapid price surges.
2) Most mined bitcoins are sold for fiat at / near the time of their eligibility, in order to cover mining costs (electricity, salaries, ASICs etc.)
3) Most Bitcoin investment buyers (HODLers) purchase during the week and spend time with family, chores etc. on the weekend. The absence of buying demand from those HODLers on weekends can lead to a price drop as mined coins are continuously dropped onto the market.
4) Savvy traders are probably already aware of these patterns and use them to hoard / dishoard, helping to balance out supply and demand and dampening this pattern.
As an additional hypothesis, I bet that:
1) Price tends to increase on weekday mornings of the biggest Bitcoin buyers markets as many people make a decision to buy Bitcoin as an investment in the morning and execute their buys then. I have noticed a big spike in price that happens regularly in the evening here (morning for Chinese buyers).
In an ideal world these kinds of patterns would be arbitraged away. However the bitcoin to fiat marketplace is very imperfect as many are (quite justifiably!) unwilling to keep much bitcoin / fiat on the exchanges, and successfully trading on the exchanges does not mean that you will walk away with those winnings in the medium / long-term as BTC or even fiat balances outside of the exchange.
Now I just have to spend some time gathering exchange price data and see if they fit my casual observations. As for trading them - I'll leave that to others. My own bitcoins leave Coinbase as soon as they are eligible!
