Week of 30 July 2018: Bitcoin drops 14.45% and closes in the lower third of its range
When a market that had risen for three of the previous four weeks falls double digits without a single shock hour, what does the week's shape say about the trend that follows?
BTC fell from 8,210.99 to 7,024.19 (-14.45%) and ETH from 466.40 to 408.79 (-12.35%). Both closed in the lower third of their weekly ranges on above-average volume (1.31x and 1.10x the prior twelve-week average). The decline was steady rather than a single shock, and the best day for BTC added only 0.20%.
What the data shows. BTC opened at 8,210.99, set its high of 8,273.00 at 01:00 UTC on Monday 30 July, and ground lower for most of the week to a low of 6,882.29 at 14:00 UTC on Sunday 5 August, closing at 7,024.19. ETH took the same path: high 469.79 in that same Monday hour, low 396.61 at 01:00 UTC on Friday 3 August, close 408.79. Both fell double digits and both closed in the lower third of their weekly ranges. The fall arrived without one shock hour: the largest hourly moves were -2.62% for BTC (14:00 UTC Saturday 4 August) and -3.64% for ETH (01:00 UTC Wednesday 1 August). Dollar volume was 2.13bn for BTC (1.31 times its prior twelve-week average) and 0.56bn for ETH (1.10 times).
What it does not show. The candles record the path, not the cause, and they do not identify who was selling. With 24 weeks of history behind this file, no percentile ranking of the week's return against past weeks is available, so how unusual a -14.45% week is cannot be settled here. Perpetual funding rates are absent, so leveraged positioning cannot be read.
What a careful desk would check. Realised volatility (the size of the swings that actually happened, expressed as a yearly figure) reached 60.4% for BTC and 62.6% for ETH. Against that, this looks like a steady grind: the worst day removed 5.43% (BTC, Saturday 4 August) and the best day added only 0.20% (Sunday), so the Sunday bounce was small and the low came late. Among the prior four weeks (+5.52%, -5.35%, +16.38%, +11.04%), only the +16.38% week was larger in magnitude, and BTC still sat 40.09% below its 52-week high, ETH 64.73%.
Ether against Bitcoin. Both fell, but ETH fell less (-12.35% against -14.45%), so the ETH/BTC ratio rose 2.46%. Hourly correlation was 0.76: close, but not lockstep. ETH printed its low on Friday while BTC's low came on Sunday, a two-day offset.
What would change this reading
- If BTC trades below 6,882.29 in a later week, the Sunday low reads as a step in an ongoing decline rather than a floor.
- If price recovers above the weekly open of 8,210.99, the week reads as a pullback that was absorbed rather than a change of trend.
- If the ETH/BTC ratio keeps rising while both assets fall, ETH is holding up relative to BTC, which changes which hedge is effective.
- If dollar volume falls back towards its prior twelve-week average, the participation behind this week's decline has faded.
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 week's closing price sits between the week's low and high