Week of 16 April 2018: Ether gains 16.30% while Bitcoin adds 5.17% on thin Bitcoin volume
When both assets rise in the same week but one gains three times as much, how much of that gap reflects genuine divergence, and how much reflects the thin trading behind it?
BTC rose from 8,355.07 to 8,787.02 (+5.17%) and ETH from 533.88 to 620.92 (+16.30%). Both set their weekly lows on the week's first two days and closed in the upper third of their ranges, but BTC dollar volume was only 0.79 times its prior 12-week average. The ETH/BTC ratio gained 10.59%.
What the data shows. Both assets lowed before they highed. BTC set its low of 7,825.40 at 20:00 UTC on Tuesday 17 April and its high of 9,035.00 at 07:00 UTC on Saturday 21 April, a range of 15.46%. ETH bottomed at 497.31 on Monday 16 April and highed at 643.49 on Sunday 22 April, a range of 29.39%. The two worst days were shared: Monday 16 April (BTC -3.47%, ETH -4.20%), and the best day was shared too, Friday 20 April (BTC +7.05%, ETH +8.62%). The largest hourly move for both landed in the hour starting 22:00 UTC on Friday (+3.78% BTC, +3.02% ETH). BTC's dollar volume of 1.95 billion was 0.79 times its prior twelve-week average; ETH's 0.48 billion was about equal to its own average.
What it does not show. Volume below the prior twelve-week average cannot tell us whether the rise was driven by new buying or by the absence of sellers. Nothing here identifies who traded or why. With only 9 weeks of recorded history, a percentile ranking against past weeks is not available, so this week's gain cannot be placed in a longer distribution. Funding data is absent, so no leverage reading can be made.
What a careful desk would check. Realised volatility, the size of the swings that actually happened scaled to a yearly figure, was 62.3% for BTC and 82.4% for ETH. A 15.46% weekly range on 0.79-times volume is the combination worth examining: moves of this size on thinner trade can reverse just as quickly. A desk would compare this week's 3.78% hourly move against its risk limits and ask whether its exits could have been filled at the prices shown.
Ether against Bitcoin. Both moved the same direction with a close hourly correlation of 0.83, so this was a shared direction, but ETH outperformed by 11.13 percentage points and the ETH/BTC ratio gained 10.59%. Both assets still sat well below their 52-week highs: BTC 25.05% below, ETH 46.43% below.
What would change this reading
- If a later week closes below this week's ETH low of 497.31, the 16.30% gain reads as a rebound inside a larger decline rather than a turning point.
- If BTC volume rises back above its prior 12-week average while price holds above the weekly open of 8,355.07, participation in the rise has broadened.
- If the ETH/BTC ratio gives back much of its 10.59% gain, this week's outperformance was a spread trade rather than a durable divergence.
- If hourly correlation falls well below 0.83 in later weeks, a hedge written between the two assets stops tracking as it did here.
Terms
- realised volatility
- how much the price actually swung over a period, expressed as a yearly percentage
- ETH/BTC ratio
- the price of one Ether measured in Bitcoin; it rises when Ether outperforms Bitcoin
- close location
- where the closing price sits between the week's low and high; upper third means it finished near the top of the range