Week of 8 October 2018: Bitcoin slips 4% while Ether falls 13% and volume dries up
When both assets fall together but one falls three times as far and trading volume is thin, what does that say about the durability of the move?
BTC fell from 6,615.26 to 6,339.34 (-4.17%) and ETH from 226.26 to 197.01 (-12.93%). Both hit their weekly low at 23:00 UTC on Thursday 11 October, and Thursday also carried the week's worst daily return. BTC volume was 0.56 times its prior 12-week average.
What the data shows. Both assets peaked midday: BTC's high of 6,715.60 and ETH's high of 232.70 came in the same hour, 12:00 UTC on Monday 8 October, in the middle of the UTC day. Both then slid to their lows at 23:00 UTC on Thursday 11 October. That Thursday was the worst day for both (BTC -5.69%, ETH -15.49%). The largest hourly move of the week also fell on Thursday but much earlier, in the hour starting 01:00 UTC (-2.95% for BTC, -5.79% for ETH), so the day's decline was spread across several hours rather than confined to one. The two markets moved closely (hourly correlation 0.89), but ETH fell faster, so the ETH/BTC ratio dropped 9.14%. Both closes sat in the lower third of their weekly ranges (BTC 26.3%, ETH 18.3%).
What it does not show. Thin volume limits what can be read into the direction. BTC volume of 1.07 billion dollars was 0.56 times its prior twelve-week average, and ETH's 0.29 billion dollars was 0.46 times. Lower volume can mean less conviction, but it can also mean fewer participants available to absorb a move; the data cannot tell which. Nothing here identifies who sold or why, and the ranking of these returns (38th percentile for BTC, 21st for ETH) reflects a short history of only 34 weeks.
What a careful desk would check. Realised volatility for ETH (69.6% annualised) was more than twice BTC's (30.7%), consistent with a week where ETH gave up 8.76 percentage points more than BTC. After four prior weeks split two up and two down, a desk would watch whether the ratio keeps falling: a further decline would mean the weakness has become specific to ETH rather than shared.
Ether against Bitcoin. The -9.14% ratio change is the week's clearest divergence. ETH closed 83.0% below its 52-week high while BTC closed 45.93% below its own, a gap the data records for this week alone.
What would change this reading
- If the ETH/BTC ratio continues to fall in later weeks, this week marks the start of an ETH-specific decline rather than a shared move.
- If volume returns towards the prior 12-week average while prices hold near these closes, the fall had broader participation than it appears here.
- If either asset trades below Thursday's lows (BTC 6,205.00, ETH 189.01), the lower-third closes were a pause rather than a floor.
- If BTC recovers towards its Monday high of 6,715.60 without ETH recovering similarly, the divergence deepens.
Terms
- realised volatility
- how much the price actually swung over a period, expressed as a yearly percentage
- hourly correlation
- how closely two prices moved together hour by hour, from -1 to 1
- close location
- where the week's final price sits within the week's high-low range, as a percentage