Week of 15 October 2018: a 21.9% range that closed back near its low
When a week opens with a sudden 10.6% hourly spike that then fades, what does the closing position inside the week's range tell us about who held control by Sunday?
BTC rose 3.96% to 6,590.11 and ETH 5.41% to 207.49, but both spent most of the week giving back a Monday spike that carried BTC to 7,680 and ETH to 239 within hours. Volume ran below the prior twelve-week average for both (0.8x for BTC, 0.64x for ETH).
What the data shows. The entire week's shape was set on Monday 15 October. BTC's low of 6,300 came at 00:00 UTC and its high of 7,680 at 06:00 UTC, six hours later, in the same hour as its largest hourly move, +10.6%. ETH's largest hourly move, +11.6%, came one hour earlier, at 05:00 UTC. Both assets peaked on Monday and then drifted lower: the worst day for both was Thursday 18 October (-1.78% for BTC, -3.13% for ETH). By Sunday's close BTC sat at 21% of its weekly range and ETH at 29%, both much closer to the low than the high. The two assets moved together hour by hour (correlation 0.88), and ETH gained 1.45 percentage points more than BTC over the week.
What it does not show. The candles cannot say why the Monday spike happened or who was behind it. The retreat after the spike does not tell us whether it was profit-taking, new selling, or simply the absence of follow-through. BTC was still 43.79% below its 52-week high and ETH 82.1% below, so this week sits inside a longer decline, but the data alone cannot say whether that decline was ending.
What a careful desk would check. Dollar volume was 0.8 times the prior twelve-week average for BTC and 0.64 times for ETH. A 10.6% hourly move on below-average volume is a different fact from the same move on heavy volume, and a desk would want to see whether later weeks confirm or fade it. Realised volatility, the size of the actual swings scaled to a yearly figure, reached 104.7% for BTC and 119.1% for ETH.
Ether against Bitcoin. ETH's 5.41% gain against BTC's 3.96%, and a 1.4% rise in the ETH/BTC ratio, marks a mild shift towards Ether after prior weeks that were mixed for ETH (+11.02%, -4.74%, -2.96%, -12.93%). One week is thin evidence of a trend.
What would change this reading
- If a later week closes below BTC's Monday low of 6,300, the spike reads as a failed rally rather than a bottom.
- If BTC trades back towards its weekly high of 7,680 on heavier volume, the fade looks like consolidation.
- If ETH's ratio advantage over BTC persists, the relative weakness in BTC's prior weeks (-4.17% most recently) is worth re-examining.
- If realised volatility stays near 104.7% while volume stays below its twelve-week average, position sizes set on volume signals deserve a second look.
Terms
- realised volatility
- how much the price actually swung over a period, expressed as a yearly percentage
- close location
- where the week's close fell within the week's high-to-low range, in percent
- hourly correlation
- how closely two prices moved together hour by hour, from -1 to 1