Week of 4 June 2018: Bitcoin falls 12.31% and Ether 15.42%, ending at the week's low area
When a week ends at the bottom of its range after a run of falling weeks, what does the shape of the decline suggest about selling pressure, and what can it not tell us?
BTC fell from 7,714.26 to 6,764.99 (-12.31%) and ETH from 619.66 to 524.11 (-15.42%). Both lows came on Sunday 10 June at different hours (BTC 18:00 UTC, ETH 22:00 UTC), after the week's largest hourly drop (-6.06% for BTC) in the hour starting 17:00 UTC. Dollar volume ran below the prior 12-week average for both assets.
What the data shows. The week opened near its top and closed near its bottom. BTC's high of 7,765 arrived early on Thursday 7 June, its low of 6,622.81 late on Sunday 10 June — a range of 17.25%. ETH's high, 625.47, came in the first hour on Monday 4 June and its low, 501.13, at 22:00 UTC on Sunday. Sunday was the worst day for both (BTC -9.7%, ETH -11.53%) and carried the largest hourly move for both in the hour starting 17:00 UTC (-6.06% and -5.01%). The best day, Tuesday 5 June, was small by comparison (BTC +1.84%, ETH +3.05%). Closes sat in the lower third of the weekly range for both (BTC 12.4%, ETH 18.5% of the way up from low to high). Both assets fell together (hourly correlation 0.88), and ETH fell further, so the ETH/BTC ratio dropped 3.55%.
What it does not show. Falling price on volume below the prior 12-week average (0.77 times for BTC, 0.63 for ETH) records less trading, not the identity or intent of sellers. The data contains no funding figures for this week, so crowding in perpetual futures cannot be read. It also cannot say whether Sunday's low held or what followed.
What a careful desk would check. Three of the prior four weeks were down (BTC -10.16%, -1.76%, -13.93%, +5.11%; ETH -8.21%, -1.77%, -20.35%, +8.56%), so this week extends an existing decline rather than starting one. With BTC 42.3% and ETH 54.78% below their 52-week highs, a -9.7% day still removes a large share of what remains. A desk would compare Sunday's 17:00 UTC hour with its stop and margin assumptions and check whether volume this light can be read as capitulation at all.
What would change this reading
- If a later week closes back above this week's BTC open of 7,714.26, the decline reads as a move that was absorbed rather than a continuing leg.
- If ETH keeps falling faster than BTC and the ratio drops further from its -3.55% weekly change, the pressure has become concentrated in ETH.
- If volume rises back towards the prior 12-week average while price holds near 6,622.81, this week's low gains significance as a tested level.
- If Sunday-style late-UTC hourly drops of about -6% repeat on lower volume, position sizing calibrated to this week's average swings remains too loose.
Terms
- realised volatility
- how much the price actually swung over a period, expressed as a yearly percentage — 68.6% for BTC and 86.9% for ETH here
- close location
- where the week's final price sits within the week's high-to-low range; the lower third means it finished near the bottom
- ETH/BTC ratio
- the price of one Ether expressed in Bitcoin; a fall means Ether weakened relative to Bitcoin