Week of 11 November 2019: Bitcoin falls 5.95% on light volume as Ether loses less
When two assets drift lower all week on below-average volume, what does the size of the decline and the light trading say about the market's conviction, and what does it not say?
BTC fell from 9,040.16 to 8,502.40 (-5.95%) and ETH from 188.96 to 183.82 (-2.72%). Both set their weekly high at 02:00 UTC on Monday 11 November, before their weekly lows. Dollar volume ran at 0.80 times BTC's and 0.62 times ETH's prior twelve-week averages, while BTC funding stayed near zero.
What the data shows. BTC fell from 9,040.16 to 8,502.40 (-5.95%); ETH fell from 188.96 to 183.82 (-2.72%). Both set their weekly high at 02:00 UTC on Monday 11 November, early in the UTC day, and the weekly high came before the weekly low for both assets. BTC's low, 8,350.68, came at 08:00 UTC on Sunday 17 November; ETH's low, 177.67, came at 14:00 UTC on Friday 15 November, in the same hour that produced the largest hourly move for both assets (-2.10% for BTC, -1.77% for ETH). Trading was thin: BTC dollar volume of 2.07bn was 0.80 times its prior twelve-week average and ETH's 0.32bn was 0.62 times. BTC closed in the lower third of its weekly range; ETH closed in the middle third. The two moved closely (hourly correlation 0.82) but not identically, so the ETH/BTC ratio rose 3.43%.
What it does not show. A decline spread across the week on light volume is consistent with demand that simply was not there, but volume figures do not identify who traded or why. Nothing here establishes whether the Sunday low was a floor or a pause. At the 22nd percentile of 91 weeks for BTC and the 40th for ETH, this was a modestly negative week by this market's own history, not an extreme one.
What a careful desk would check. Realised volatility, the size of the swings that actually happened scaled to a yearly figure, was 33.7% for BTC and 34.5% for ETH. ETH recorded slightly higher volatility yet lost less than half as much, which points to relative buying interest rather than lower risk. A desk would also note BTC closing near the bottom of its range while funding averaged 0.0085% per eight hours, a near-neutral carry that gives no signal about crowding on either side.
What would change this reading
- If BTC trades below this week's low of 8,350.68 in a later week, the Sunday low reads as a pause in a decline rather than a floor.
- If volume returns towards its prior twelve-week average while price holds above 8,502.40, the week's drift reads as a lack of activity rather than active selling.
- If the ETH/BTC ratio keeps rising after a 3.43% weekly gain, Ether's relative strength is becoming a trend worth sizing around.
- If BTC funding moves well away from zero, the neutral carry of this week no longer describes the market.
Terms
- realised volatility
- how much the price actually swung over a period, expressed as a yearly percentage
- close location
- where the week's closing price sits between its own high and low
- hourly correlation
- how closely two prices moved together hour by hour, from -1 to 1