20 March 2020

Market Commentary: Looking at weekend risk considerations for the crypto markets

Patrick Heusser

Patrick Heusser

Senior Trader at Crypto Broker AG

About the author

Just like in 2008 and 2011 after a turbulent week, traders, investors, and market participants are very much looking forward to the weekend. It will give them time to reflect on the big picture.

Crypto traders and crypto investors, however, do not have this luxury. Flows, risks, and customer requests need to be handled over the weekend, too.

With more and more countries going into full lockdown mode in the Western Hemisphere, I wonder how much activity we will actually see over the coming weekends. Volatility is already elevated compared to 2-3 months ago, so my guess is that the weekends could become even more extreme.

What I have learned from the past crisis is that traders try to get their risk numbers in order on Thursdays, so that they do not have to trade large volumes on Fridays. This is because spreads are usually wider on Fridays in times like these. However, it didn’t feel like this yesterday, since the market looked slightly more positive in both traditionals and crypto, but this could have been a false alarm.

If more news spread over the weekend, or updated numbers/stats of COVID-19 are released (which are not fully priced by the market), the risk will be skewed to the downside in terms of prices. In such a case, the only market to express your risk-off trade is BTC$.

Currently, this is the combination that is holding me back a bit from taking more risk on board (and buying more BTC) at the current levels. But, I have to admit that we are starting to see some short-term decoupling of BTC$ and global equities.

I’ve mentioned it a couple of times before, but I think it is something one cannot stress enough: stay nimble and flexible with your positions.

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