How Do Time Zones Affect Cryptocurrency Market?
World financial markets do not work simultaneously, due to different time zones. A number of researchers tried to identify the patterns and dependances of traditional financial institutions and stock prices from the time of day. A one trend was found as a result of the research: trading activity increases with the opening of exchanges in some major countries, for example, the United States, which sometimes leads to the increased volatility and sharp jumps of prices of certain assets. Experienced traders are well aware of this and try to cash out on this, while focusing on general trends of the market.
But is it applicable to cryptocurrency markets? Because, as it is known, the vast majority of these markets work around the clock, therefore only temporary price fluctuations may be caused by the human factor. For instance, Asian or American investors may wake up and see a sudden price drop of some cryptocurrency. Then they might start the panic selling of their coins, worsening the situation on the market. In this case, it is necessary to figure out such trends in advance and to develop a strategy, that can help you to save funds from these "panic attacks" on the market. Let's try to do it.
For illustration purposes, we highlighted the "awakening hours" (7-10 am) in three main regions: Asia (UTC+9), Europe (UTC+1) and the USA (UTC-5). On the BTC price chart below, these zones are highlighted red, green, and blue respectively.
There are no systematic trends on this chart, except for some separate coincidences when large market movements were connected to highlighted zones. To study this more thoroughly, we calculated the percentage change of BTC price during the day.
Still no trends. All changes are limited, and few jumps from 13:00 to 15:00 were caused by the general volatility of the market in these days.
Let's come back to the original idea of time zones. We chose time intervals of three hours and calculated the average percent changes of prices during the day in all possible combinations.
Yet again, it turns out that all changes vary in the very moderate for cryptocurrencies range: 0.06-1%. The peak of growth is the range between 19:00-22:00 UTC, which hints us that either Alaska, that wakes up in this hours, is in fact impacting the cryptocurrency market way more than we thought, or that we should look for the answer elsewhere.
Elsewhere is the final evaluation: correlation between hourly price changes in percent and BTC price.
There is no sense to go further: correlation coefficients for weeks are 0.07, while for the weakest dependance it should be at least 0.1.
That is why you may be confident that time zones are little to no affect BTC price and, as a consequence, the cryptocurrency market in general. On the one hand, traders are not able to earn a couple of percent on the daily market fluctuations. On the other hand, you can leave your the money for the night, without any fear that the sudden panic in some country might halve your cryptocurrency funds.