A reserve marked in the worst week of 170, with a quarterly report still weeks away
Should the treasury rebalance the BTC reserve after a -25.36% week, or keep the policy size and let the quarterly report mark it where it lands?
The market facts are real; the decision maker is illustrative.
The week and the position
In the week of 17 May 2021, BTC fell 25.36%, from 46,426.83 to 34,655.25, with a 14.38% drop on Wednesday, an -8.95% hour starting 12:00 UTC, and a 30,000.00 low at 13:00 UTC that day. Thursday rebounded 10.51%. Volume ran 1.95x the prior 12-week average, and the return sat in the 1.0 percentile of 170 weeks. ETH underperformed BTC by 16.11 percentage points, and the ETH/BTC ratio fell 21.59%. An illustrative treasury holds BTC as a multi-quarter reserve and reports at quarter-end, so no report is due this week.
Judgment
A reserve sized for quarters should not be re-sized by the worst single week in its history. Keep the policy allocation, and do not treat Thursday's 10.51% rebound as a signal to add, since the close still sat in the lower third of the week range. Trim only the portion of the reserve that its operating cash needs cannot survive without, and accept the mark-to-market loss in the quarterly report rather than realise it at the week's extremes.
What would change it
If the treasury's own cash schedule requires spending from the reserve before quarter-end, the portion needed should be sold regardless of price. If the reserve policy sets a drawdown limit and this week's 46.34% distance from the 52-week high breached it, the allocation must be reduced to the limit.
What sets this case apart
This is a reserve-policy question under a reporting calendar, not a trade; the loss is accepted on the report rather than realised in the week.