Week of 2 December 2019: Bitcoin adds 1.6% while Ether ends flat on thin volume
After a mixed run of prior weeks, what can a modest weekly gain on below-average volume say about the market's direction, and what does the swing inside Wednesday add to that reading?
BTC rose from 7,391.50 to 7,510.11 (+1.60%); ETH went from 150.72 to 150.44 (-0.19%). Both assets set their weekly low and high on Wednesday 4 December, with BTC ranging 9.66%. Dollar volume was $2.44bn for BTC and $0.26bn for ETH, below the prior twelve-week average for both, and both sat far below their 52-week highs.
What the data shows. The whole week's shape came on Wednesday 4 December. BTC fell to 7,067.00 at 08:00 UTC, then rallied to 7,750.00 by 13:00 UTC — the same hour as its largest hourly move of the week, +3.88%. ETH followed: its low of 143.15 came earlier, at 01:00 UTC, and its high of 151.98 also landed at 13:00 UTC with a +2.78% hour. BTC then posted its best day on Thursday (+2.70%) and its worst on Wednesday (-1.35%). The two assets moved closely (hourly correlation 0.87), but ETH lagged, so the ETH/BTC ratio — how much Ether costs in Bitcoin terms — fell 1.76%. Volume was light: BTC at 0.90 times its prior twelve-week average, ETH at 0.48 times. Both weekly returns ranked at the 52nd percentile of the 94 weeks recorded before them.
What it does not show. A +1.60% week on thin volume cannot distinguish accumulation from an absence of sellers. The data contains no order-book or open-interest figures, so the size and identity of participants behind Wednesday's swing are unknown. The weekly close does not establish a trend: BTC was still 46.21% below its 52-week high and ETH 57.96% below its own.
What a careful desk would check. BTC closed at the 64.9th percentile of its weekly range and ETH at the 82.6th, so ETH finished nearer its top than BTC did — yet ETH still underperformed on the week. Realised volatility, the size of the actual swings scaled to a yearly figure, was 55.1% for BTC and 45.8% for ETH; BTC had fallen 18.81% two weeks earlier, and three of the prior four weeks were down. A desk would compare the Wednesday range with its position sizing rather than with the weeks that had already produced an 18.81% fall.
What would change this reading
- If BTC trades below its weekly low of 7,067.00 in a later week, the Wednesday reversal reads as a failed bounce rather than a base.
- If the ETH/BTC ratio keeps falling after a -1.76% week, Ether's weakness is becoming a relative trend rather than a one-week gap.
- If volume returns towards 0.90 times its twelve-week average and BTC holds above 7,510.11, the light-volume caution weakens.
- If funding, which averaged 0.0046% per eight hours for BTC and 0.0092% for ETH, turns negative while price holds, the long-side cost picture changes.
Terms
- realised volatility
- how much the price actually swung over a period, expressed as a yearly percentage
- ETH/BTC ratio
- the price of Ether measured in Bitcoin; a falling ratio means Ether is losing value relative to Bitcoin
- funding rate
- the periodic payment between long and short holders of a perpetual futures contract; positive means longs pay shorts