By the end of the week, traders typically shift their focus from making money to managing risk, as they cannot adjust their positions until markets reopen on Sunday evening. However, with the emergence of cryptocurrency markets, traders can now trade derivatives contracts called 'perpetual futures' 24/7, allowing them to hedge their bets over the weekend. This development has significant implications for the oil market, where traders can now capture profits over the weekend if the market becomes chaotic.
While institutional traders have yet to fully embrace weekend trading, the growth of perpetual futures contracts on crypto exchanges is changing the dynamics of the market. As one trader noted, 'You have more touch points for picking up and laying off risk over the weekend than you had before.' The rise of perpetual futures is also providing traders with a tool to gauge how the market will trade when it opens after the weekend, giving them a better idea of the direction of their bets.
As the market continues to evolve, it is likely that traditional finance will be influenced by crypto innovations, and the old routine of the 'weekend effect' will become a thing of the past.