“It was the eve of Christmas, and not a creature was moving in the entire house,” with the exception of the biggest cryptocurrency exchanges.
When the global financial markets are closed, as they are on Christmas Day and New Year’s Eve, cryptocurrency brokerage firms, market makers, and over-the-counter trading operations continue to operate, accept orders, and provide liquidity.
This trait results from the 24/7 nature of cryptocurrency markets overall. The industry’s growing capital markets are made up of the constant trading of digital assets among public ledgers, cryptocurrency brokerages, exchanges, and a network of trading companies.
Notably, liquidity providers such as Wintermute and GSR are required to maintain a certain level of presence, maintaining over-the-counter trading desks and providing liquidity, even on Christmas Day. In their capacity as middlemen, market makers provide buy and sell price quotes that guarantee traders have enough liquidity to enter and exit particular assets. Larger clients are served by an OTC desk, which facilitates high amounts of off-exchange trading.
According to Evgeny Gaevoy, co-founder of Wintermute, “crypto markets never sleep, and neither does Wintermute’s OTC desk.” “We are positioned to serve counter-parties from all geographies, recognizing that in some regions, including parts of Asia, Christmas is observed as a regular working day.”
At GSR, too, it’s a similar tale—”always staffed.”
The volatility of volatility
Regarding the state of the market around the holidays, Richard Rosenblum of GSR stated that it can vary, but “the base case is that you expect lower volatility.”
“But if there is a VOL catalyst that comes into play, then you’d anticipate even bigger moves than normal, as liquidity conditions are more challenged.”
As a result, during a holiday like Christmas, volatility is usually higher.
According to Rosenblum, portfolios that contain derivatives require ongoing oversight, which necessitates having eyes on screens throughout the slumbering time between Christmas and New Year’s.
“Even if there were to be low client activity, when having a portfolio with options and derivatives, there is additional risk management and maintenance when the market moves around.”
Regarding the quantity of tokens exchanged, Gaevoy of Wintermute reported that while most TradFi terminals and trading stations are closed over the holidays, counterparties that are local to the cryptocurrency space continue to trade.
“Historically, we’ve witnessed consistent activity levels during the holiday season, with a slightly lower amount of activity on Christmas Day,” he stated. “As a source of liquidity for hundreds of tokens, we trade a wide range of assets throughout the year, including Christmas, though with a moderately lower number of unique assets traded compared to other days in December.”
Gaevoy notes that even if Christmas is a happy occasion, things normally pick up towards the end of the year.
“We receive increased onboarding requests,” he stated. “These are often driven by strategic considerations like the end-of-year tax, either for booking a trade or for operational needs such as settling invoices before year-end.”
