The world of digital assets operates without pause—24 hours a day, 7 days a week, 365 days a year. Yet, as U.S. asset managers race to launch crypto-based exchange-traded funds (ETFs), they face a fundamental mismatch: traditional financial markets operate within strict trading hours, while cryptocurrency markets never close.
This structural disconnect raises critical questions about investor access, liquidity, and market fairness—especially during weekends when Bitcoin prices can swing dramatically while ETFs sit idle. As regulators weigh approval for these new investment vehicles, the so-called “Sunday effect” has emerged as a key concern among financial experts.
The 24/7 Nature of Crypto vs. Traditional Market Hours
Unlike stocks or bonds, Bitcoin and other digital currencies trade continuously across global exchanges. Price movements occur at any time—overnight, over weekends, or during holidays. In contrast, ETFs listed on U.S. exchanges are bound by Monday-to-Friday trading schedules.
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This creates a significant risk: if Bitcoin drops sharply on a Saturday evening, investors in a Bitcoin ETF cannot react until markets reopen on Monday. Similarly, if prices surge over the weekend, gains remain unrealized until trading resumes.
Carol Alexander, Professor of Finance at the University of Sussex, calls this disconnect a major flaw. “The crypto market is 24/7, so there’s no role for an open-ended fund that you can’t get out of during the weekend,” she argues. She identifies what she terms the “Sunday effect”—a pattern of sharp price shifts between Sunday and Monday—as particularly problematic, given that many U.S. financial institutions are inactive over the weekend.
Regulatory Hurdles and Investor Protection Concerns
To date, the U.S. Securities and Exchange Commission (SEC) has not approved any standalone cryptocurrency ETFs. While numerous firms—including Fidelity, WisdomTree Investments, and Bitwise Asset Management—have filed proposals, regulatory hesitation persists.
One core concern is investor protection. Alexander warns that being locked into an ETF during volatile weekend downturns could lead to widespread class-action lawsuits. Additional worries include systemic risk, market manipulation potential, and the broader “gamification of financial trading,” highlighted earlier this year by events surrounding GameStop.
Matt Hougan, Chief Investment Officer at Bitwise Asset Management, acknowledges these risks but emphasizes investor education. “An ETF isn’t going to be for every investor,” he says. “One of the tradeoffs you make is that you don’t have 24/7 liquidity.”
Still, Hougan believes the benefits outweigh the limitations—for many. ETFs offer tax efficiency, integration with traditional brokerage accounts, and regulatory oversight, making them more accessible than direct crypto ownership.
Canada’s Lead in Crypto ETF Innovation
While the U.S. debates, Canada has already moved forward. In February 2025, Purpose Investments launched the Purpose Bitcoin ETF (BTCC), the country’s first crypto-based ETF. It quickly attracted $1 billion CAD in assets within two months—a clear signal of strong market demand.
Although assets later dipped to around $900 million following a mid-May market correction, Greg Taylor, Purpose’s Chief Investment Officer, sees long-term promise. “We think this is a good step for getting crypto into the mainstream instead of a more niche investment,” he says.
Purpose works with Canadian market makers to closely track Bitcoin’s price volatility throughout the day and maintains a tight bid-ask spread—often just one cent—ensuring high intraday liquidity for investors.
Since BTCC’s debut, other Canadian firms—including CI Financial—have launched competing Bitcoin and even Ethereum ETFs, further expanding institutional access to digital assets.
How ETFs Expand Access to Cryptocurrency
For most American investors, current options for gaining exposure to crypto remain limited:
- Buying directly from peers
- Using platforms like Coinbase or Gemini
- Investing through private funds for accredited investors
These methods often come with high premiums, complex tax reporting, and integration challenges within broader portfolios.
ETFs simplify this process. They allow investors to gain exposure through familiar channels—traditional brokerages—without needing to manage private keys or navigate crypto exchanges.
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Hougan notes that ETFs also offer structural advantages: daily pricing transparency, custodial security, and potential tax benefits under certain account types.
Understanding the Tradeoffs: Liquidity vs. Simplicity
While ETFs bring institutional credibility and ease of use, they introduce a critical limitation: non-continuous liquidity.
As Taylor points out, this isn’t unprecedented. Commodity ETFs tracking gold or oil also face similar constraints despite their underlying markets operating nearly around the clock. However, those markets are far less volatile than crypto.
“Awareness is really key,” Taylor stresses. “Investors need to understand the limitations of an ETF.” Those seeking real-time exposure and full control may still prefer direct ownership or futures-based products.
Yet for mainstream investors prioritizing simplicity, security, and regulatory compliance, crypto ETFs represent a compelling middle ground.
Frequently Asked Questions (FAQ)
Q: What is the 'Sunday effect' in cryptocurrency markets?
A: The 'Sunday effect' refers to significant price movements in Bitcoin between Sunday and Monday, often due to limited U.S. market activity over the weekend while crypto markets continue trading globally.
Q: Why hasn't the SEC approved a Bitcoin ETF yet?
A: The SEC cites concerns over market manipulation, investor protection, systemic risk, and the lack of continuous trading access in traditional ETF structures as key reasons for its cautious stance.
Q: Are crypto ETFs less risky than buying Bitcoin directly?
A: Crypto ETFs offer custodial security and regulatory oversight, reducing risks like theft or loss of private keys. However, they do not provide full ownership or 24/7 trading access.
Q: Can I trade a Bitcoin ETF on weekends?
A: No. Like all exchange-traded funds, Bitcoin ETFs can only be bought or sold during regular market hours on business days.
Q: How do Canadian crypto ETFs handle price volatility?
A: Firms like Purpose Investments partner with market makers to track Bitcoin’s price in real time and maintain narrow bid-ask spreads, enhancing liquidity during trading hours.
Q: Is a crypto ETF suitable for all investors?
A: Not necessarily. Investors seeking full control, decentralization, or continuous trading may prefer direct ownership. ETFs are best suited for those prioritizing convenience and integration with traditional finance.
The debate over crypto ETFs reflects a larger clash between legacy financial systems and the decentralized, always-on nature of blockchain technology. While structural challenges remain—especially around market hours and liquidity continuity—the growing demand seen in Canada suggests U.S. approval may only be a matter of time.
As investor awareness grows and regulatory frameworks evolve, crypto ETFs could become a cornerstone of modern diversified portfolios—bridging innovation with accessibility.
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