TradFi Fuels Weekend Crypto Pressure During Risk-Off Periods, Says DefiCapital CEO

• Why Are Weekends So Brutal for Crypto?
• The Institutional Shorting Game
• Is Crypto’s 24/7 Nature a Curse?
• FAQs: Weekend Crypto Volatility

Arthur Cheong, CEO of DefiCapital, highlights how traditional finance (TradFi) exacerbates crypto market volatility during weekends when risk aversion spikes. With institutional capital treating crypto as a "preferred shorting instrument," Bitcoin and Ethereum often face disproportionate sell-offs while traditional markets remain closed. This article explores the pattern, its implications, and why tokenized assets like gold thrive in these conditions.

Why Are Weekends So Brutal for Crypto?

Arthur Cheong, CEO of Singapore-based DefiCapital, has raised concerns about crypto markets becoming a "punching bag" for institutional traders during risk-off weekends. Unlike traditional markets that close on weekends, cryptocurrency trading operates 24/7, leaving it vulnerable to extreme volatility when geopolitical tensions or macroeconomic shocks emerge.

Cheong points to a clear pattern: when risk aversion spikes over weekends—such as during Israel's preventive strike against Iran—crypto assets bear the brunt of sell-offs while traditional markets remain closed. For instance:

Meanwhile, traditional assets like the S&P 500 remain unchanged until Monday openings—often recovering most losses when trading resumes. This creates an asymmetric impact where crypto markets absorb all the initial panic.

The BTCC team notes three key factors exacerbating weekend volatility:

Interestingly, tokenized commodities like gold (XAUT) often see weekend rallies during these events, suggesting capital isn't leaving crypto markets entirely—just rotating to perceived safer assets within the ecosystem.

While crypto's always-on nature provides flexibility, it also creates unique vulnerabilities during periods of market stress. As Cheong observes, "We're not just seeing random volatility—there's a clear pattern where crypto becomes the release valve for weekend risk events."

The Institutional Shorting Game

Weekend Volatility: Crypto as the Preferred Hedge Target

Arthur Cheong, CEO of DefiCapital, highlights a recurring pattern where institutional investors use cryptocurrencies as their go-to instrument for short hedging during weekend risk-off events. Unlike traditional markets that remain closed, crypto's 24/7 trading availability makes it vulnerable to abrupt sell-offs when geopolitical or macroeconomic shocks occur. Cheong describes this as "kicking a man while he’s down," as crypto absorbs the initial panic before traditional markets can react.

Case Studies: Weekend Sell-Offs and Recoveries

The Liquidity Paradox

While crypto's continuous trading attracts institutional participation, it also creates a liquidity trap during weekends. Lower trading volumes amplify price swings when risk-averse investors rush to exit positions before traditional markets reopen. This dynamic was evident in the January 2026 event where:

• BTC fell from $98,000 to $94,000 despite no fundamental change
• Tokenized commodities like gold outperformed as alternative hedges
• S&P 500 later opened higher, confirming the overreaction

Market Mispricing Opportunities

Some analysts view this pattern as creating strategic entry points. The weekend sell-offs often overstate risks while traditional markets remain frozen, leading to temporary disconnects between crypto prices and underlying fundamentals. As Cheong observes, "The dust settles by Monday, but crypto takes the first hit every time."

Is Crypto’s 24/7 Nature a Curse?

The Weekend Volatility Paradox

Bitwise CIO Matt Hougan identifies a unique opportunity in what he calls "structural mispricing" within crypto markets. While weekend price gaps often trigger panic, they simultaneously create windows for strategic investors to accumulate assets before traditional markets reopen. This phenomenon was starkly illustrated during the October2025 tariff crisis: while the S&P 500 eventually recovered with a 7% gain over six months, bitcoin investors who held through the weekend turbulence saw returns exceeding 100%.

Case Study: October2025 Market Reaction

Hougan observes, "Market overcorrections frequently occur when human traders aren't actively monitoring positions. The automated nature of weekend trading creates exaggerated moves that often reverse when traditional market participants return." This pattern repeated in January2026 when semiconductor export restrictions were announced, with BTC briefly dipping below $94,000 before recovering.

The Liquidity Factor

Three key elements amplify weekend volatility:

Tokenized commodities like gold (XAU) demonstrate the inverse effect - during the February2026 geopolitical tensions, tokenized gold surged to $5,500 while physical markets were closed, as shown in CoinMarketCap data.

This 24/7 market structure presents both challenges and opportunities. While it exposes crypto assets to abrupt swings, it also enables rapid repositioning that traditional markets can't match until their next opening bell. As Hougan notes, "The smart money isn't trying to time these moves, but rather building positions during these structural dislocations."

FAQs: Weekend Crypto Volatility

Why does crypto crash more on weekends?

Thin liquidity and institutional shorting amplify sell-offs when traditional markets are closed.

How can traders protect themselves?

Diversify into tokenized commodities like gold (XAUT) or use limit orders to avoid panic selling.

Will this pattern continue?

Likely yes—until crypto markets mature or TradFi adopts 24/7 trading.