A forced cut on Wednesday, then a 13.16% best day and a positive weekly close
Should the fund restore full ETH exposure after its loss limit forced a cut mid-week, or keep the position reduced given that ETH still lost 11.0 points against BTC?
The market facts are real; the decision maker is illustrative.
The week and the position
In the week of 21 October 2019, ETH opened at 175.18, fell to 153.45 on Wednesday (worst day, -5.16%), then rose 13.16% on Friday and closed at 183.75, up 4.89% and in the upper third of a 28.86% range. Realised annualised volatility was 87.5%, and dollar volume was 1.75 times its prior 12-week average. ETH remained 48.65% below its 52-week high and lagged BTC by 11.0 points, with the ETH/BTC ratio falling 9.49%. An illustrative fund with a fixed loss limit cut exposure on Wednesday's decline and must now decide on re-entry.
Judgment
The cut executed the rule as written; a rebound does not prove the rule wrong. Keep exposure reduced through the week's close and re-enter only under a rule fixed in advance, such as restoring a set fraction after a weekly close above the cut price. Size the re-entry below the prior level: ETH rose 4.89% yet lost 11.0 points to BTC, so the recovery is partly a market-wide move, not ETH strength. Accept having missed Friday's 13.16% day.
What would change it
If the fund's written rule already permits re-entry once price recovers a stated share of the fall, following it is consistent with the mandate. A weekly close above the week's high of 197.74, or a rising ETH/BTC ratio, would justify restoring full size.
What sets this case apart
This case is a forced-cut re-entry where the asset rose on the week yet underperformed its reference pair, so exposure size and asset choice are decided together.