Week of 10 September 2018: Ether gains 12.26% while Bitcoin adds 4.04%
When two crypto assets rise together but one gains three times as much, what does the week's price and volume data reveal about relative strength, and what does it leave unexplained?
BTC rose from 6,252.26 to 6,505.00 (+4.04%) and ETH from 196.13 to 220.17 (+12.26%). Hourly correlation was 0.82, but the ETH/BTC ratio gained 7.9%. BTC volume was 0.77 times its prior 12-week average while ETH's was 1.45 times.
What the data shows. BTC rose from 6,252.26 to 6,505.00 (+4.04%) and ETH from 196.13 to 220.17 (+12.26%), both moving up over the week. Each set its low before its high: BTC's low of 6,169.68 came at 14:00 UTC on Tuesday 11 September, ETH's low of 167.32 at 08:00 UTC on Wednesday 12 September. Both assets had their best day on Thursday 13 September (BTC +2.35%, ETH +15.02%) and their worst on Tuesday 11 September (BTC -0.27%, ETH -6.1%). Both closed in the upper third of their weekly range (BTC 80.7%, ETH 87.9%). Volume pointed in opposite directions: BTC's dollar volume of 1.46 billion was 0.77 times its prior twelve-week average, while ETH's dollar volume of 0.77 billion was 1.45 times its prior twelve-week average.
What it does not show. The data records prices and volume, not the buyers behind them. Nothing here says whether ETH's gain came from new positioning or from short covering, and nothing identifies which market participants were active. The 30 weeks of history behind the percentile rankings is short, so the 67th percentile for BTC and 87th for ETH rest on a narrow sample.
What a careful desk would check. Realised volatility, a measure of how much prices actually swung, annualised, was 36.0% for BTC and 120.3% for ETH, with a weekly range of 6.73% against 35.92%. A position sized on BTC's numbers would be badly mis-sized for ETH. Both assets sat far below their 52-week highs (BTC -44.52%, ETH -81.01%) and both had just come off a sharp down week (BTC -14.4%, ETH -33.74%), so a careful desk would read this week against a still-deep decline rather than as a standalone advance.
Ether against Bitcoin. Hourly correlation of 0.82 puts the two in the close band, so they travelled the same path, but ETH covered more ground. The ETH/BTC ratio rose 7.9%, and the return gap was 8.22 percentage points. The divergence appears in the daily figures (ETH +15.02% on Thursday against BTC +2.35%) rather than in a single hour: ETH's largest hourly move was +4.52%, BTC's largest was -1.97%.
What would change this reading
- If a later week closes below BTC's weekly low of 6,169.68, this week's +4.04% reads as a rebound inside a decline rather than a turn.
- If the ETH/BTC ratio gives back the 7.9% gained this week, the outperformance was a short-lived rotation rather than a durable shift.
- If BTC volume stays below its prior twelve-week average while ETH volume falls back from 1.45 times its own, the relative strength has thin participation behind it.
Terms
- realised volatility
- how much prices actually swung over the period, expressed as a yearly percentage
- hourly correlation
- how closely two prices moved together hour by hour, from -1 to 1; 0.82 means they usually moved in the same direction
- ETH/BTC ratio
- the price of one Ether divided by the price of one Bitcoin; it rises when Ether outperforms Bitcoin