The Real Reason Why Crypto Always Goes Down at Night

Given that cryptocurrencies are part of an emerging market, they often are pretty volatile, with prices constantly swinging in unpredictable ways. If you’re a miner or a crypto enthusiast, you’re probably aware of the widespread speculation that cryptocurrency has a tendency to go down at night and then go back up after a few hours. However, is there any truth to this claim, and if so, why does it happen?

The real reason why crypto goes down at night is that activity, in general, does the same. During this timeframe, there’s less trading, lower transactional volumes, and fewer events that can cause price spikes. However, the trend isn’t always predictable, as crypto trading happens worldwide.

It’s important to remember that while this is a general trend, it’s far from being an established fact. In the following sections, I’ll delve into the reasons why cryptocurrency goes down at night, why the currency is so volatile and what can be the best time to trade.

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What Makes Cryptocurrency Go Down?

The main factors that make cryptocurrency go down are lack of demand, low volume of trading, market news, and announcements. However, these are far from the only elements that affect the industry’s pricing.

All of these factors influence cryptocurrencies in different ways. However, by considering them as a system that operates in synchrony, it can be much easier to explain why the value goes down at night.

Cryptocurrencies aren’t governed by any kind of authority, unlike traditional currencies, whose value can be improved by the influence of the government. But even though there’s no central authority that can influence a cryptocurrency’s value, there’s no shortage of other external factors that can affect the industry more than you’d think. 

The value of cryptocurrencies is determined by supply and demand, as with most goods and services traded on the free market, and it goes down when demand is low. Therefore, given that at night there’s less activity and trading in general, demand drops. 

As a result, so does the value of cryptocurrencies in general.

Trade Volume Goes Down In Spite Of a 24-Hour Market

You might argue that the crypto market is open 24 hours, seven days a week, so there’s no reason why the value might change at certain hours compared to others. However, activity and trade volume aren’t the same throughout the day. 

The market is more active during working hours, which explains why the value goes down at night.

It’s important to keep in mind that the situation presents differently in different time zones. Nighttime for the United States would mean that trade would be at its lowest in this particular timezone due to the lack of activity. However, in another time zone, like China, the market might be experiencing completely different trends.

The Market News Can Affect Cryptocurrency

Another important factor that can make the value of cryptocurrencies go down is market news

Just like with traditional currencies, certain types of information can travel around the world and affect their value in a fundamental way. If a certain announcement is expected to happen the next day, e.g., a government aims to increase crypto regulations, the value of cryptocurrencies could drop as the announcement approaches.

It’s not just official announcements that can cause a drop in the value of a cryptocurrency. 

With social media being a constant presence in everyone’s lives, a simple tweet at night can send certain cryptocurrencies crashing. For example, Elon Musk tweeting something pessimistic or vague about crypto can immediately affect its value.

However, in general, it’s safe to assume that most announcements that can affect the value of cryptocurrencies one way or another happen during standard working hours. In short, the lack of reports that could boost the value combined with low trading volumes can cause cryptocurrencies to go down.

Why Is Cryptocurrency So Unpredictable?

Cryptocurrency is so unpredictable compared to traditional currencies because the market is still new, the technology is constantly evolving, and they are heavily affected by speculation and media.

Despite what I’ve explained so far, it’s still smart to keep an eye out and not try to predict a certain trend in the way cryptocurrencies perform. 

It’s widely accepted that cryptocurrencies are very unpredictable, so it’s wise to be alert to any types of events or changes that can affect them fundamentally. For this reason, it’s worth knowing: “What makes crypto so unpredictable?”

Crypto Is Still New

The cryptocurrency industry is still considered an emerging market.

Being so new, it’s inevitably much smaller compared to traditional currencies or gold. The size of the crypto market is incomparable to these older currency markets, which explains why the slightest inconsistency could translate into extreme price swings.

Forces that can be considered insignificant when it comes to gold or other currencies could have a significant effect on crypto. For example, a group of investors deciding to sell a few hundred million dollars is barely news in gold, but for crypto, the ripple could crash the whole market.

Cryptocurrencies Are an Ever-Evolving Technology

Blockchain is still in its first phases of development, and so are other crypto technologies, so there’s always a chance of problems and obstacles that could destabilize cryptocurrencies. If these problems occur, they could cause crypto prices to fall drastically if they’re not solved within a certain timeframe.

However, the new technology can also affect cryptocurrencies in the other direction by boosting the prices. Any kind of progress, new blockchain platforms, or new cryptocurrencies can drive the demand up, increasing the prices.

The Nature of Cryptocurrencies

Cryptocurrencies are digital, meaning they only exist as balances and aren’t backed by any physical element like traditional currencies are. As I explained above, this makes them dependent on supply and demand only, which adds to their unpredictability.

In other words, crypto prices depend on the public’s faith in them. 

For example, if people believe that Bitcoin will no longer be as valuable, they’ll try to sell, which will reduce the price of Bitcoin and consequently will push more and more people to sell. This can lead to an eventual crash.

The Media Has a Significant Effect

Media can be very powerful when it comes to affecting cryptocurrencies, with the market being as small and new as it is. Any kind of relevant announcement or event can convince people to act and start selling or buying crypto. 

The media effect makes crypto especially volatile.

A major problem arises when it comes to this phenomenon. Sometimes news outlets sensationalize news for maximum impact, or sometimes they simply report wrong information in an attempt to be the first one to break the news. 

Therefore, many miners choose to be more cautious and wait rather than act as soon as possible. However, it’s safe to say that these platforms play a significant role in making cryptocurrencies unpredictable.

Speculations Have a Significant Effect

Speculation becomes part of a vicious circle in the crypto market. The volatility of the crypto market, caused by the factors mentioned above, leads to a significant number of investors betting on the way cryptocurrencies will behave at a certain point in the future. 

By predicting right, they can sell or buy at an opportune time and make significant revenues.

These bets themselves cause volatility in the market, making cryptocurrencies even more unpredictable. All these investors betting on the way the value of a cryptocurrency will rise or drop causes volatility, which in turn, attracts more betting.

Conclusion

Cryptocurrencies are an emerging market, and as such, they’re quite volatile compared to traditional currencies or gold. However, there’s a trend that shows that their prices go down usually at night. 

This tendency can be attributed to the fact that trading volumes, news, events, and general activities that can drive up prices also go down during nighttime.

However, it’s important to remember that cryptocurrencies are unpredictable, so while certain crypto can hit a low during one night, it can go back up and hit a new high the next one.

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