Week of 30 December 2019: Bitcoin and Ether close flat after a Friday dip and Sunday recovery
When both assets fall to their lows on the same day and recover into the week's close, what does a flat weekly return say about the market's direction?
BTC moved from 7,388.43 to 7,358.75 (-0.40%) and ETH from 134.36 to 135.37 (+0.75%), so the two closed in different directions. Both set their lows early on Friday 3 January and their highs on Sunday 5 January. Dollar volume ran at 0.66 times the prior 12-week average for BTC and 0.57 times for ETH.
What the data shows. BTC's low of 6,871.04 came at 02:00 UTC on Friday 3 January, and the open had stood 7.53% above it. The largest hourly move of the week, +3.71%, came two hours later at 04:00 UTC on the same day. Friday was also the best day for both assets (BTC +5.45%, ETH +5.63%) after Thursday 2 January was the worst (BTC -3.26%, ETH -2.70%). The lows preceded the highs for both, with BTC's high of 7,495.00 at 04:00 UTC and ETH's of 138.19 at 17:00 UTC, both on Sunday 5 January. Both closes sat in the upper third of their weekly ranges (BTC 78.2%, ETH 77.1%). Realised volatility, the size of the swings that actually happened scaled to a yearly figure, was 43.3% for BTC and 50.0% for ETH.
What it does not show. The candles do not say why the two assets fell on Thursday and Friday or who bought the recovery. Trading activity was below the prior 12-week average for both (0.66x for BTC, 0.57x for ETH), which describes the size of the moves but not their cause. The week's return sat at the 45th percentile of 98 recorded weeks for BTC and the 55th for ETH, so neither result was unusual against the history supplied.
What a careful desk would check. A weekly return near zero hides a 9.08% range for BTC and 9.78% for ETH, with the open sitting 7.53% above the BTC low and 6.74% above the ETH low. A desk would compare its position sizing and stops against those intra-week figures rather than the -0.40% and +0.75% closes, and would note that both assets still sat 47.29% (BTC) and 62.17% (ETH) below their 52-week highs.
Ether against Bitcoin. The two moved together but not evenly: hourly correlation was 0.76, and the ETH/BTC ratio rose 1.16%, so ETH outperformed by 1.15 percentage points. Funding, the periodic payment between long and short holders of perpetual futures, averaged -0.0004% per eight hours for BTC and +0.0081% for ETH, near zero on both sides.
What would change this reading
- If BTC trades back below Friday's low of 6,871.04 in a later week, the recovery into the Sunday close of 7,358.75 reads as a pause rather than a floor.
- If volume returns towards its prior 12-week average while one asset breaks out of this week's range, the low-volume character of this week stops applying.
- If the ETH/BTC ratio continues rising after its 1.16% gain, Ether's outperformance is a trend rather than a single week's difference.
Terms
- realised volatility
- how much the price actually swung over a period, expressed as a yearly percentage
- close location
- where the closing price fell within the week's high-to-low range, as a percentage from the low
- hourly correlation
- how closely two prices moved together hour by hour, from -1 to 1