Week of 22 October 2018: BTC and ETH edge lower on volume near a quarter of the prior average
When both assets fall slightly on very light volume, what does the week's structure suggest about conviction, and what can it not establish about direction?
BTC fell from 6,590.12 to 6,489.93 (-1.52%) and ETH from 207.46 to 204.99 (-1.19%). Dollar volume ran at 0.29 times BTC's and 0.23 times ETH's prior twelve-week average. Both highs came in the same hour on Monday 22 October.
What the data shows. The week's high for both assets, 6,639.00 for BTC and 209.30 for ETH, came in the same hour: 06:00 UTC on Monday 22 October. Neither asset set its low before that high, so the week drifted lower from an early peak. BTC's range was 2.88%, from a high of 6,639.00 to a low of 6,453.00 reached late on Sunday 28 October, and it closed at 6,489.93, in the lower third of that range (19.9% of the way up). ETH's range was wider at 3.54%, with its low of 202.14 on Tuesday 23 October and a close at 204.99, in the middle third. The largest hourly moves were small: -0.85% for BTC in the hour starting 01:00 UTC on Thursday 25 October and +2.14% for ETH in the hour starting 08:00 UTC on Friday 26 October. Both assets fell on the same day, Thursday 25 October (BTC -0.59%, ETH -0.69%). Realised volatility, the size of the swings that actually happened scaled to a yearly figure, was 16.6% for BTC and 27.1% for ETH.
What it does not show. Light volume tells us fewer dollars changed hands than in a typical recent week; it does not tell us whether that reflects indifference, waiting, or a shift in where trading happens. The data has no open interest or order book, so the size of standing positions cannot be measured. Weekly returns ranked at the 42nd percentile for BTC and the 56th for ETH against only 36 weeks of history, so the comparison set is thin.
What a careful desk would check. BTC closed 44.64% below its 52-week high and ETH 82.32% below, and three of the prior four weeks were down. Against that backdrop, a -1.52% week on 0.29-times volume is a drift, not a break: no hourly move exceeded 0.85% for BTC. A desk would ask whether the Sunday low of 6,453.00 holds in the following week, since a close near the week's low with little volume can resolve either way.
What would change this reading
- If BTC trades below the week's low of 6,453.00 on heavier volume, the quiet drift reads as the start of a move rather than an absence of one.
- If volume returns towards its prior twelve-week average while price holds above the low, the week reads as consolidation.
- If ETH begins falling faster than BTC, its 82.32% distance from the 52-week high suggests less support from prior trading levels.
Terms
- realised volatility
- how much the price actually swung over a period, expressed as a yearly percentage
- percentile
- the share of past weeks with a lower value; the 42nd percentile means 42% of past weeks were lower
- close location
- where the weekly close sits between the week's low and high, as a percentage