TradFi Drives Weekend Crypto Pressure During Risk-Off Periods, Says Defiance Capital CEO

When markets flinch, old-school finance squeezes crypto hardest—especially when the trading week ends.

The Weekend Crunch

It's a pattern emerging from the chaos: risk-off sentiment hits, and traditional finance players trigger a cascade of selling pressure in digital assets. The pressure doesn't clock out at five on Friday. According to the CEO of Defiance Capital, it intensifies when liquidity thins over the weekend, leaving crypto markets exposed to TradFi's flight to safety.

Liquidity's Vanishing Act

The mechanism is brutally simple. Faced with macro fears or a market-wide shudder, institutional portfolios rebalance. Hedge funds, family offices, and other TradFi vessels sell what they can to cover losses or reduce exposure. Crypto, still viewed by many as a high-beta risk asset, gets cut first. And with fewer market makers active on Saturdays and Sundays, those sell orders hit harder—amplifying price swings and creating a self-fulfilling prophecy of weekend dread.

A Decoupled Future?

The real question isn't if this happens, but for how long. As crypto's own institutional infrastructure matures—with deeper derivatives markets, more robust lending protocols, and dedicated market-making—the weekend vulnerability could fade. The goal? An ecosystem that doesn't buckle just because some hedge fund in Connecticut had a bad week. Until then, it's a stark reminder that for all the talk of decentralization, price discovery still dances to the beat of Wall Street's risk models. The ultimate irony? The very system crypto aimed to bypass now dictates its most volatile moments—proving that old money still knows how to throw its weight around, even in a digital playground.

Weekend crash hits crypto markets hard 

Bitcoin and most of the crypto market returned into the red after Israel said it launched a preemptive strike on Iran on Saturday. However, that carnage did not spread to broader financial markets as most of them are closed for business until at least Monday. 

Cheong is now calling out what he is starting to feel like a trend. 

When President TRUMP announced 100% tariffs on China on top of existing 30% levies, the markets reacted as expected. However, the S&P only had to endure a couple of hours of that carnage before it closed for the weekend, only to open higher than its previous close the following Monday, October 13. 

The story was different for Bitcoin, which dipped below $110,000 after starting the Friday above $121,000. ethereum also inched under $3,700 after entering the weekend above $4,300. 

A similar sequence played out in the middle of January when the Trump admin announced fresh rules for semiconductor exports to China. BTC, which started January 14 NEAR $98,000, almost broke below $94,000 before that weekend ended.

Ironically, both BTC and ETH tokens are now trading at nearly 50% of their valuation during the now infamous October 11 weekend, which coincided with the crypto market’s single largest liquidation day that wiped out more than $19 billion. 

The S&P Index on the other hand is up over 7% in the last six months, up over 200 points since October 13. 

After this weekend’s events, Defiance Capital’s Arthur Cheong’s sentiments have gone past chalking this up to happenstance or coincidence. Apparently, he’s starting to see a pattern. 

Are weekends bad for crypto?

While institutional users have flocked into crypto because of its 24/7 nature, especially evident in the almost vertical growth in tokenization and stablecoin usage, it also comes with associated drawbacks, where institutional capital also gets quickly pulled out during events that cause investors flee risk assets for more stable alternatives. 

Unlike other “risk assets” that are insulated from this weekend’s uncertainty, Bitcoin, Ethereum and the broader crypto market are exposed to the wild swings that come with the major headlines of the weekend.

Thinner liquidity during the weekend and a rush to dump crypto ahead of the stock market’s opening on Monday all combine to exacerbate what is already a crypto-specific problem. 

However, Bitwise CIO Matt Hougan has spotted an opportunity, according to a Tuesday memo pointing out the disconnect between how investors react and what the market is actually saying: “That gap creates a significant opportunity—not to try to pick winners prematurely, but to build broad exposure to the space while the market is still mispricing the structural shift.”

That pattern is also playing out this weekend as tokenized gold almost touched $5,500 while traditional gold markets remain closed for the weekend. 

In essence, while 24/7 markets allow investors to pull out funds from regular crypto assets, it could also mean it allows them to cash in on rallies on tokenized assets, commodities and equities.

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