When it comes to trading various forms of investment, it is often said that the most important work gets done between 9:30 am and 4:00 pm EST every weekday, when the New York Stock Exchange is open. Trading cryptocurrency is slightly different. Does the crypto market trade 24/7?
The crypto market does trade 24/7. Since the crypto market occurs worldwide and online rather than in one place during working hours, cryptocurrency can be traded at any time, any day of the week. Cryptocurrency can even be traded on major holidays, both recognized and unrecognized.
While the crypto market in some ways is very similar to the stock exchange, there are some major differences between the two markets. Read on to learn more about the crypto market, the stock market, their similarities and differences, and why they operate on different schedules.
Trading Hours: Crypto Markets vs. Stock Markets
Crypto markets and stock markets have differing trading hours, and it’s due to how each of them operate.
For the most part, average investors only function within one market. If you are an American investor, you are probably working on the New York Stock Exchange. While many major investment firms work in many exchanges, most individuals function in one exchange.
For stock exchanges to function, there used to be an actual person that would run around on the stock exchanges floor (called the “pit”) initiating trades on behalf of customers.
With the digitization of many aspects of the market, most stock trades now occur online, but the concept is the same in which an actual person initiates a trade. While you can now declare that you are going to sell or purchase a stock at market open/close, you can’t do it outside of trading hours.
This means that stock exchanges are limited to certain hours. This also explains why there are differences between stock market futures and actual numbers.
While the stock exchange actually initiates trades from 9:30 am to 4:00 pm Mondays-Fridays, stock traders can plan to initiate trades when it opens, meaning that the actual value of stocks can change during trading hours, futures can change at any time.
Cryptocurrency is different. Since cryptocurrency exchanges are online platforms that can be accessed anywhere in the world at any time, cryptocurrencies can trade at any time, meaning the crypto market never closes.
While it might be 2:00 am in Florida, it is 1:00 pm in Beijing, China, meaning that people are wide awake, ready to do crypto trading. While in the US it might be Independence Day, Canada doesn’t celebrate it, meaning people are working and trading.
How the Crypto Market Works
When it comes to cryptocurrency, I can’t just sell this virtual money at the same spot that I sell stocks, because they are two very different things.
Cryptocurrency is simply a type of money that is entirely conducted online whose prices change depending on the amount of currency available. While the US dollar is always worth the same amount in a strict sense, its “buying power” changes based on how much people think it is worth.
Cryptocurrency works differently in the fact that while 1 bitcoin will always be worth 1 bitcoin, it is compared to other government-backed currencies. So one bitcoin might be worth 30,000 US$ or €30,000 (Euros).
Some people will convert currencies if they believe that their value will change significantly, but generally, common investors do not engage in currency speculation. Cryptocurrency speculation is more common and explains fluctuations in cryptocurrency value.
If you want to buy, sell, or invest generally in cryptocurrency, you do this on a crypto exchange. These crypto exchanges are generally online websites that allow you to purchase, sell, or exchange cryptocurrency from one currency to another.
While stocks are exchanged at an actual place, cryptocurrency is exchanged entirely online on certain websites and platforms that specialize in cryptocurrency exchange.
Different Items Get Traded on Different Exchanges
While it might make sense that crypto markets are open 24/7 while stock exchanges are only open sometimes, you might find yourself asking, why don’t we just trade all of these investments on the same market? This is a completely fair question that many people find asking themselves that has a fairly dull answer: because they are different things.
Investors are typically very picky and very precise in their language. People use investments to make money and, because nearly $5.1 trillion is exchanged every day, people like to know what they are purchasing and selling.
As a result, different items are sold in different places. Stocks are sold on the stock exchange, bonds are sold on the bond exchange, and currency is sold on the currency exchange.
It is kind of like going to a hardware store to buy eggs. When you are trying to buy hardware, it makes sense to purchase supplies from somewhere different than where you buy your food. The same is true of different types of investments.
Stock Markets and Crypto Markets Compared
While people generally refer to the place stocks are exchanged as the generic “stock market,” there is not one single exchange worldwide.
While the best-known stock exchange in the United States is the New York Stock Exchange, there are more than fifteen stock exchanges across the United States. Globally, there are upwards of sixty major stock exchanges.
To put things into perspective, there are hundreds of cryptocurrency exchanges worldwide, and since these exchanges operate online, they can exist anywhere.
Stock exchanges work by selling stocks to individual investors looking to make money and build wealth. Cryptocurrency exchanges trade the actual cryptocurrencies as opposed to the stock of a company.
However, the price of cryptocurrency fluctuates with purchases and sales, similar to how stocks do. Even though the crypto market operates 24/7, you can only ever buy or sell at the most current price.
Stocks and Cryptocurrencies Both Have Limited Supplies
Stocks represent partial ownership in a company. Amazon, for example, has about 425 million stocks available. The most popular cryptocurrency, Bitcoin, has over 18 million currently in existence.
Theoretically, 425 million people could own a bit of Amazon, but people tend to hold hundreds or thousands of shares of a given stock. Similarly, people might hold hundreds of Bitcoin.
Depending on how much the company makes every year or quarter and how much people believe the company is worth determines the company’s stock price.
Crypto Markets Are More Active During Business Hours
You can still trade stocks after hours, but the volume isn’t as high. Similarly, the crypto markets tend to be the busiest during regular trading hours anyways. However, sometimes, you might see major price changes after regular business hours or during weekends.
Since crypto markets operate globally, different exchanges may experience different high points. However, regardless of the market, peak trading hours tend to take place during the day.
While stock markets tend to have limited hours for trading, crypto markets trade online all day, every day. Cryptocurrency is completely bought, sold, and exchanged online, while stocks and bonds are exchanged at a physical place.
Though a company can sell the same stock on multiple exchanges, most people only work within one exchange, thus limiting the hours for trading.
Investing, though a great option for generating wealth, does have a significant risk of loss involved. If you plan to invest, consider consulting a financial advisor.