TradFi’s Weekend Stranglehold: Crypto Takes a Beating During Risk-Off Chaos, Warns Defiance Capital CEO

Weekends have become a brutal proving ground for cryptocurrency markets, as traditional finance (TradFi) giants wield their influence during moments of global panic. Arthur Cheong, CEO and CIO of Defiance Capital, has called out this growing trend, slamming institutional capital for turning Bitcoin and Ethereum into convenient tools for short hedges when uncertainty spikes and traditional markets are shuttered for the weekend.

• TradFi’s Iron Grip: Institutional players are shorting crypto during weekend risk-off events, causing massive price drops.
• Market Carnage: Geopolitical tensions and policy shocks have triggered huge outflows, with Bitcoin and Ethereum hit hardest.
• Silver Lining: Some see the market’s overreactions as a rare chance to bet on blockchain’s long-term promise.

TradFi’s Weekend War: Crypto as the Easy Target

Crypto’s always-on nature used to be its crowning glory—a defiant break from Wall Street’s rigid hours. Now, it’s a glaring liability. While the S&P 500 has powered ahead with a 7% gain over the past six months, tacking on over 200 points since mid-October, Bitcoin and Ethereum are left exposed when TradFi markets close for the weekend. Cheong doesn’t sugarcoat the ugly truth of this dynamic, as highlighted in a recent discussion on how TradFi drives crypto pressure during risk-off weekends.

“[Crypto has] become their preferred instrument of short hedges during any risk-off event on the weekend now,” Cheong states with surgical precision.

For those just stepping into the crypto arena, let’s break down the jargon. A “risk-off event” happens when global uncertainty—whether from geopolitical flare-ups like wars or abrupt economic moves like tariffs—pushes investors to dump risky assets like crypto for safer havens such as cash or bonds. “Short hedges” are bets against an asset’s price, where big players use borrowed funds or derivatives to profit from a decline. When TradFi titans, backed by algorithmic trading and massive capital, jump on these bets during off-hours, crypto markets—already running on lower trading activity—get absolutely crushed. The fallout often includes cascading liquidations, where over-leveraged traders are forced to sell at a loss, sparking a chain reaction of further price drops that can wipe out billions in minutes.

The numbers tell a grim story. Following Israel’s preemptive strike on Iran, a geopolitical bombshell, crypto markets hemorrhaged $128 billion in mere hours while TradFi slept through the chaos. Bitcoin tanked from over $121,000 to below $110,000. In another weekend disaster, President Trump’s rollout of 100% tariffs on China—piled atop existing 30% levies—sent Ethereum crashing from above $4,300 to under $3,700. This isn’t new. Back in January, U.S. semiconductor export restrictions targeting China dragged Bitcoin from near $98,000 to $94,000. Right now, both Bitcoin and Ethereum are trading at about half their value from the notorious October 11 weekend, when a staggering $19 billion in liquidations—the largest single-day wipeout in crypto history—left retail investors gutted. To put that in perspective, $19 billion is more than the entire market cap of many mid-tier altcoins, gone in a flash.

Always-On, Always Bleeding: Crypto’s Fatal Flaw

The bitter irony is hard to swallow. Crypto’s 24/7 accessibility, a pillar of its decentralized ethos, makes it a perfect target for TradFi’s speculative assaults. With fewer traders active on weekends, the market can’t absorb the shock of institutional sell-offs. But there’s a flipside to this non-stop operation. Tokenized assets—digital representations of real-world items like gold or even real estate on a blockchain—can shine when traditional markets are offline. During one recent weekend, tokenized gold skyrocketed to nearly $5,500 while physical gold markets were dormant, showing how crypto can seize value shifts in real time. Yet, for every tokenized gold success, there’s a Bitcoin or Ethereum nosedive waiting, fueled by the very openness that enables instant trading.

Why has TradFi latched onto crypto for these weekend games? The answer lies in the space’s deepening ties to mainstream finance. Bitcoin ETFs, like BlackRock’s IBIT, have poured billions from institutional war chests into the market since their launch. Stablecoins such as USDT and USDC provide a seamless gateway for big money to flow in and out. These mechanisms, hailed as steps toward “legitimacy,” have instead morphed crypto into a playground for short-term profiteering. It’s starting to feel like TradFi has hijacked crypto’s renegade soul with a bloated wallet and a trigger-happy short button.

Decentralization Under Siege: Is Crypto’s Heart Still Beating?

Cheong’s frustration strikes a nerve with many in the crypto world. Blockchain was forged to shatter centralized control, empowering individuals to own their money and data without gatekeepers. Weekend crashes orchestrated by institutional algorithms feel like a slap in the face to that vision. These aren’t mere price blips; they’re a glaring sign that TradFi holds dangerous sway over a market meant to topple it. Bitcoin, the original rebel, takes the hardest punches—its sheer dominance makes it the go-to for shorting, while Ethereum’s role as the backbone of smart contracts and DeFi (decentralized finance, for the uninitiated, meaning financial apps run by code, not banks) marks it as a parallel target.

Yet, the community isn’t rolling over. Decentralized exchanges (DEXs) like Uniswap and Curve are picking up steam as alternatives to centralized platforms where TradFi’s shadow looms large. DeFi protocols—think Aave for lending or dYdX for trading—are positioning themselves as fortresses of autonomy, though they’re not bulletproof against volatility. Could these innovations help crypto reclaim its independent streak? Or will institutional muscle just find fresh loopholes to exploit? That’s the million-Bitcoin question. And let’s not kid ourselves—regulation might soon rear its head. Bodies like the SEC could eye weekend volatility as a problem to “solve,” but any intervention risks swapping one overlord for another, strangling crypto’s freedom further.

A Fire Sale on the Future: Opportunity Amid the Wreckage

Amid the doom, not everyone is waving a white flag. Matt Hougan, CIO of Bitwise, spots a glimmer of hope in the rubble. “That gap creates a significant opportunity—not to try to pick winners prematurely, but to build broad exposure to the space while the market is still mispricing the structural shift,” he argues. In plain terms, crypto’s current chaos doesn’t reflect its true worth or its power to reshape finance from the ground up. For those with the guts to stomach the dips, weekend crashes might just be a discount on the future of money.

Hougan isn’t peddling pipe dreams. Blockchain’s real value lies beyond price tickers—it’s in borderless payments through Bitcoin’s Lightning Network, a layer-2 solution slashing fees and speeding transactions, or Ethereum’s programmable contracts fueling everything from digital art (NFTs) to decentralized loans. TradFi’s weekend meddling is a nasty speed bump, no doubt, but one the crypto diehards believe can be navigated with broader adoption and tech upgrades like layer-2 scaling that lessen reliance on centralized weak points. Hell, if Bitcoin can survive a decade of skeptics calling it a scam, it can weather Wall Street’s tantrums.

Ground Zero: The Painful Reality for Crypto Holders

Let’s not gloss over the carnage. Weekend trading, with its razor-thin activity, means even minor sell-offs can snowball into full-scale disasters, especially when geopolitical triggers like U.S.-China trade spats or Middle East conflicts hit the headlines. Retail investors, often over-leveraged and betting more than they can afford, get obliterated in the crossfire. And don’t get me started on the vultures—every crash spawns a swarm of pump-and-dump scams and bogus “recovery predictions” flooding social media, preying on the desperate. No bullshit here: these grifters are a stain on the space, and we’ve got zero tolerance for their games.

Altcoins aren’t dodging the bullets either. While Bitcoin and Ethereum absorb TradFi’s direct firepower due to their size, smaller chains and meme coins often suffer even wilder swings as speculative hype evaporates during risk-off panics. Ethereum’s utility as the hub of DeFi and smart contracts offers a sliver of resilience, but nowhere near enough to escape the market-wide pain. It’s a rough ride across the board.

The Road Ahead: Can Crypto Break Free from TradFi’s Clutches?

Crypto’s 24/7 pulse is its greatest strength and its deadliest curse. It grants unparalleled access and innovation, but leaves no escape hatch when the world freaks out. As institutional capital keeps flooding in, the tension between TradFi’s risk-averse playbook and crypto’s untamed spirit is set to explode. Bitcoin maximalists like myself can’t help but grit our teeth—BTC, the pioneer of financial sovereignty, shouldn’t be TradFi’s whipping boy. Yet, I’ll concede that Ethereum and other protocols fill critical gaps with smart contracts and niche use cases that Bitcoin isn’t built for. This ecosystem needs all hands on deck to push the revolution forward.

For now, holders of Bitcoin, Ethereum, and beyond are stuck bracing for impact, praying the dream of decentralization outlasts the nightmare of weekend bloodbaths. As TradFi’s grip tightens, one question burns: can crypto’s fight for freedom survive a reality where Wall Street’s shadow never fades?

Key Takeaways: Unpacking Crypto Volatility and TradFi’s Impact

• Why do Bitcoin and crypto markets crash harder on weekends?
  Crypto’s non-stop trading exposes it to instant reactions during risk-off events when traditional markets are closed, worsened by low weekend activity that amplifies sell-offs.
• How does TradFi fuel crypto volatility during risk-off periods?
  Institutional investors exploit Bitcoin and Ethereum as short hedges during uncertainty, yanking capital fast and driving brutal price drops, especially over weekends.
• Is there any upside to the current crypto market chaos?
  Absolutely—experts like Matt Hougan highlight that overreactions create undervalued entry points for those banking on blockchain’s long-term disruption of finance.
• How do geopolitical events hammer cryptocurrency prices?
  Crises like Israel’s strike on Iran or Trump’s China tariffs spark risk-off panic, pushing investors to dump crypto assets and triggering massive market outflows.
• Can decentralization protect crypto from TradFi’s dominance?
  To an extent—DEXs and DeFi platforms like Uniswap and Aave offer alternatives to centralized systems, but they’re still vulnerable to institutional-driven volatility for now.