Week of 6 August 2018: Bitcoin falls 10.19% and Ether 22.23%, both near weekly lows
When Bitcoin and Ether fall together but Ether falls twice as far, what does the week say about the common move and about the relative one?
BTC fell from 7,024.19 to 6,308.33 (-10.19%) and ETH from 408.77 to 317.89 (-22.23%). Both closed in the lower third of their weekly ranges after setting lows on Saturday 11 August. The ETH/BTC ratio dropped 13.41%, so a little over half of Ether's fall was against Bitcoin, with the rest part of the common move.
What the data shows. BTC opened at 7,024.19, set its high of 7,160.00 in the first hour on Monday 6 August, and fell to a low of 5,971.00 at 05:00 UTC on Saturday 11 August, a 19.91% range from high to low. It closed at 6,308.33, down 10.19%, at 28.4% of the way up its weekly range, in the lower third. The worst day was Wednesday 8 August (-6.48%) and the best Thursday 9 August (+3.92%). ETH moved the same way and further: it fell from 408.77 to 317.89 (-22.23%) across a 35.75% range, closing 12.3% of the way up its weekly range above its low of 304.45. Both assets recorded their largest hourly move in the same hour, starting 17:00 UTC on Saturday (BTC 5.38%, ETH 6.22%), and both volumes ran above the prior twelve-week average (BTC 1.32 times, ETH 1.19 times).
What it does not show. The candles give no cause, and they do not identify who was selling. Neither asset's data includes funding rates, so the leverage behind the move cannot be seen here. Only 25 weeks of history are recorded, so no ranking of this week's return against past weeks is available.
What a careful desk would check. Realised volatility, the size of the swings that actually happened scaled to a yearly figure, reached 82.5% for BTC and 96.5% for ETH. At the close BTC was 46.19% below its 52-week high and ETH 72.58% below, so both were deep in a longer decline, and the prior four weeks were mixed for both (BTC: -5.35%, 16.38%, 11.04%, -14.45%).
Ether against Bitcoin. Hourly correlation was 0.85, a close co-movement, yet ETH lost 12.04 percentage points more than BTC and the ETH/BTC ratio fell 13.41%. That gap is a little over half of ETH's 22.23% fall, so the common move explains a large part of the direction while the ratio carries the rest.
What would change this reading
- If BTC trades below this week's low of 5,971.00 in later weeks, Saturday's floor reads as a step down rather than a hold.
- If the ETH/BTC ratio stops falling after its 13.41% drop, the extra Ether weakness reads as a one-week relative move.
- If volume falls back towards the prior twelve-week average while prices stay near the lows, this week's activity looks like a single burst rather than sustained selling.
- If later weeks push BTC back above its open of 7,024.19, the week reads as a decline that was fully retraced.
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; falling means Ether is weakening against Bitcoin
- hourly correlation
- how closely two prices moved together hour by hour, from -1 to 1