Circadian Rhythm

CroW...PVMn

20 Jan 2024

120

Circadian Rhythm

Circadian Rhythm in Cryptocurrency

In classical financial markets, many instruments can be traded at certain time intervals. Investors who buy and sell during the trading hours can sometimes close their transactions on the same day, and sometimes carry them to the next days.
The SPY ETF, which started operations in 1993 and follows the S&P 500 index, is seen as an important financial instrument by many investors. Those who bought the SPY ETF in 1993 and still hold it earned 9x returns. However, since that date, a person who traded in the S&P 500 index during the trading hours could not obtain a 9-fold return.
The biggest reason for this is the performance of the SPY ETF after the closing. An investor who bought during the trading hours and sold at the end of the trading hour could not benefit from this performance.

Trading Hours and Yields in Cryptocurrencies

The main difference between cryptocurrencies and traditional markets is that crypto assets can be traded 24/7. Unlike stocks, crypto assets are not limited to the opening date or time of the exchange for trading. On the contrary, investors who live and trade in different time zones in crypto money markets that are open 24/7 have some effects on the market. In terms of the trading hours of cryptocurrencies, when we divide them into time zones as in the traditional financial system, the returns of the assets reach significantly different rates in this time period.
For example, someone who has been holding Ethereum (ETH) since the beginning of 2020 would have received 22 times the return, while the same person would have had a negative return if they had only held ETHs between Hong Kong trading hours. On the contrary, if he had held it during London or New York trading hours, he would still have achieved a high return.
When we look at the other major cryptocurrencies Bitcoin (BTC), Ripple (XRP) and Polkadot (DOT) in the same time frame, we see similar results. During Hong Kong trading hours, almost all major cryptocurrencies have a lower rate of return when compared to other time zones. Cryptocurrencies, which offer high returns mostly during London trading hours, offer different returns in different time zones according to the regions where the investors are localized.

Among the biggest reasons for this are the central bank meetings, inflation data or economic data, which have the most impact in the global financial world, are usually announced during the London or New York trading hours. The initiation of many European and US-based corporate companies into crypto currency transactions in 2020 and 2021 also has a significant impact on these price movements.

Conclusion

As a result, investors’ biological clocks, or circadian time zones, cause the returns of assets in the crypto money markets to be shaped according to these hours. In a market that is open 24/7, many factors such as the sleeping patterns of investors and the regions they live in can have a serious impact on prices and returns.