Week of 16 July 2018: Bitcoin gains 16.38% while Ether adds only 1.71%
When Bitcoin and Ether share the same direction but finish the week 14.67 percentage points apart, what does that gap tell us about where the move was concentrated?
BTC rose from 6,354.15 to 7,394.79 (+16.38%) on dollar volume of 2.13 billion, 1.28 times its prior 12-week average. ETH rose from 449.79 to 457.47 (+1.71%) on volume 0.94 times its average, so the ETH/BTC ratio fell 12.61%.
What the data shows. BTC opened near its weekly low of 6,330.40, set at 02:00 UTC on Monday 16 July, then rose to 7,700.00 by 16:00 UTC on Friday 20 July, a range of 21.64%. The largest hourly move, +6.29%, came in the hour starting 17:00 UTC on Tuesday 17 July, the same hour as ETH's largest hourly move (+5.41%), and BTC rose 8.84% that day, its best day of the week. BTC closed at 77.7% of its weekly range, in the upper third, and stood 36.93% below its 52-week high. ETH followed early and then diverged: its high of 515.47 came on Wednesday 18 July, but its low of 440.00 arrived later, at 22:00 UTC on Friday. ETH closed at 23.1% of its range, in the lower third, and 60.53% below its 52-week high. The two assets still moved closely hour to hour (correlation 0.85).
What it does not show. Price data cannot say why the two markets separated or which one led the flow of capital. Volume labels differ (BTC above its 12-week average, ETH below), but no open-interest or order-book figures are present, so the size and direction of positioning cannot be measured here.
What a careful desk would check. Realised volatility, the size of the swings that actually happened scaled to a yearly figure, was higher for ETH (78.5%) than BTC (67.4%) despite ETH's smaller weekly gain. A desk would ask whether its sizing assumed the two assets still move together, since a 12.61% ratio move can break hedges struck at the start of the week.
Ether against Bitcoin. The ETH/BTC ratio fell 12.61%, the clearest fact of the week. BTC's prior four weeks were mixed (-4.77%, 3.57%, 5.52%, -5.35%), two down and two up, so this gain arrived after an uneven stretch rather than a steady trend.
What would change this reading
- If the ETH/BTC ratio recovers in later weeks, this week's gap reads as a rotation into BTC rather than a lasting re-rating.
- If BTC trades back below its weekly open of 6,354.15, the 16.38% gain reads as a move that was given back.
- If ETH volume rises above its 0.94-times reading while price holds above 440.00, the divergence may be resolving.
Terms
- ETH/BTC ratio
- the price of Ether divided by the price of Bitcoin; a fall means Ether is losing value against Bitcoin
- close location
- where the week's closing price sits between the weekly low and high, as a percentage
- realised volatility
- how much the price actually swung over a period, expressed as a yearly percentage