Week of 30 April 2018: Ether gains 14.97% while Bitcoin adds 2.57%
When one of the two largest crypto assets rises close to six times faster than the other in the same week, how much of that is relative strength, and how much is a shared rebound?
BTC rose from 9,417.04 to 9,659.01 (+2.57%) and ETH from 690.85 to 794.30 (+14.97%). Both reached their lows on Tuesday 1 May, ETH at 01:00 UTC and BTC at 12:00 UTC, and both best days were Thursday 3 May. ETH volume was 1.53 times its prior 12-week average; BTC volume was 0.85 times.
What the data shows. BTC opened at 9,417.04 and closed at 9,659.01 (+2.57%), inside a range of 8,800.49 to 10,020.00 (13.86%). ETH opened at 690.85 and closed at 794.30 (+14.97%), inside a range of 627.58 to 839.99 (33.85%). Both lows came on Tuesday 1 May, ETH at 01:00 UTC and BTC at 12:00 UTC, and the week's largest hourly fall struck for both assets in the hour starting 00:00 UTC that day (-3.15% BTC, -5.64% ETH). Both then rose: the best day was Thursday 3 May (BTC +5.43%, ETH +13.14%) and the worst was Sunday 6 May (-2.08% BTC, -3.08% ETH). Both closes sat in the upper third of their weekly ranges. Activity diverged: ETH's dollar volume of 0.77bn was 1.53 times its prior twelve-week average, while BTC's 2.09bn was 0.85 times, i.e. below its own average.
What it does not show. Prices say how far and how fast, not who was buying or why ETH moved so much further than BTC. Volume for BTC was below its prior twelve-week average, which is consistent with a quieter week for that asset, but the data cannot separate lack of interest from lack of sellers. Only eleven weeks of history exist here, so no percentile against past weeks can be computed.
What a careful desk would check. ETH's realised volatility (the size of the actual swings, scaled to a yearly figure) was 97.5% against BTC's 54.9%, and its range was 33.85% against 13.86%. A desk sizing positions on BTC's swings alone would be underestimating the moves ETH actually made. The prior four weeks were up for both assets, so this was at least a fifth consecutive weekly gain; a desk would ask how much of the move is extension rather than recovery, noting BTC still sat 17.61% below its 52-week high and ETH 31.47% below.
Ether against Bitcoin. The ETH/BTC ratio rose 12.09%, and ETH outperformed BTC by 12.4 percentage points. Hourly correlation was 0.85, close but not identical, so the two moved together without moving in step. The ratio gain is the part of ETH's week that a BTC hedge would not have removed.
What would change this reading
- If hourly correlation stays near 0.85 in later weeks while the ETH/BTC ratio keeps rising, the week reads as the start of a relative move rather than a shared rebound.
- If BTC dollar volume returns above its prior twelve-week average (0.85 times this week), the lack of BTC participation looks temporary rather than structural.
- If a later week closes below this week's lows of 8,800.49 for BTC or 627.58 for ETH, the Tuesday reversal loses its support.
Terms
- ETH/BTC ratio
- the price of one Ether expressed in Bitcoin; it rises when Ether outperforms Bitcoin
- realised volatility
- how much the price actually swung over a period, expressed as a yearly percentage
- hourly correlation
- how closely two prices moved together hour by hour, from -1 to 1