The traditional Wall Street trading week, which typically runs from Monday to Friday, is being disrupted by the rise of crypto markets. By Friday afternoon, traders usually start thinking about risk management for the weekend, as they cannot actively manage their positions during this time. However, with the advent of perpetual futures contracts in crypto, traders can now hedge their positions 24/7.
This development has significant implications for the trading of commodities and other assets. For instance, the growth of perpetual futures contracts has led to increased trading volumes over weekends, with some exchanges reporting record volumes. The availability of these contracts has also changed how traders approach risk management, with some now willing to hold positions over the weekend. Furthermore, the use of perpetual futures contracts has created new opportunities for traders, such as basis trading and carry trades.
While institutional traders have been slow to adopt these contracts due to concerns about liquidity and infrastructure, there are signs that this is changing. The influence of perpetual futures contracts on traditional markets is also becoming more apparent, with some traders using them as a gauge for market direction when traditional markets reopen. Overall, the rise of crypto markets and perpetual futures contracts is redefining the concept of weekend trading and forcing traditional Wall Street traders to adapt to a new reality.