Week of 7 January 2019: Bitcoin falls 12.81% and Ether 25.82% in a single week
When both assets fall together but Ether loses twice as much, what does the gap tell us about a shared move versus asset-specific selling?
BTC fell from 3,987.62 to 3,476.81 (-12.81%) and ETH from 153.89 to 114.16 (-25.82%). Both hit their worst day and their largest hourly drop on Thursday 10 January. The ETH/BTC ratio fell 14.92%, and both assets closed in the lower third of their weekly range.
What the data shows. BTC fell from 3,987.62 to 3,476.81 (-12.81%) and ETH from 153.89 to 114.16 (-25.82%). The two moved closely hour by hour (correlation 0.90), but ETH fell 13.01 percentage points further. Thursday 10 January was the worst day for both (BTC -9.59%, ETH -15.64%) and carried the largest hourly move for both in the hour starting 06:00 UTC (-5.23% for BTC, -8.07% for ETH). Both closed in the lower third of their weekly range, with lows late in the day on Sunday 13 January (BTC 3,441.30 at 16:00 UTC, ETH 111.87 at 19:00 UTC). ETH's weekly high was the week's opening hour. BTC dollar volume was 0.93 billion, 0.77 times its prior twelve-week average; ETH's was 0.44 billion, 1.1 times. ETH's return ranked at the 6th percentile of the 47 weeks before it, BTC's at the 17th.
What it does not show. The candles record direction and speed, not cause. Nothing here identifies who was selling or whether the selling was forced. Both assets sat far below their 52-week highs (BTC -70.34%, ETH -90.15%), but the four prior weeks were mixed for BTC (-9.01%, 21.69%, -3.25%, 4.85%) and mostly up for ETH (-9.21%, 52.37%, 6.77%, 11.65%), so the data does not establish a single trend running into this week. It does not establish that the decline ended. No funding figures were supplied, so the positioning of leveraged traders cannot be read.
What a careful desk would check. Realised volatility, the size of the swings that actually happened scaled to a yearly figure, was 60.4% for BTC and 106.3% for ETH. The Thursday hour shows how far a stop could be moved through in sixty minutes. Volume was below the prior twelve-week average for BTC and above it for ETH, so a desk would ask whether ETH's move drew more participation than BTC's.
Ether against Bitcoin. ETH rose in three of the four prior weeks while BTC rose in two, so the ratio had been drifting towards ETH before this week. This week's -14.92% ratio change gives back part of that relative gain in one move, inside a 38.98% ETH range against an 18.26% BTC range.
What would change this reading
- If the ETH/BTC ratio stops falling after a 14.92% weekly drop, the divergence reads as a single week's repricing rather than a sustained shift.
- If BTC closes a later week back above its open of 3,987.62, the fall reads as a move that was absorbed rather than the start of a further leg down.
- If ETH volume stays above its prior twelve-week average while price holds above the week's low of 111.87, the selling pressure shows signs of easing.
- If BTC volume returns towards 1.0 times its prior average from 0.77, the thin participation behind this week's 12.81% fall would no longer describe later weeks.
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; it falls when Ether underperforms Bitcoin
- hourly correlation
- how closely two prices moved together hour by hour, from -1 to 1