Week of 6 January 2020: Bitcoin gains 11.24% while still 41% below its 52-week high
When both assets post high-percentile weekly gains while sitting far below yearly highs, what does the price path establish, and what does it leave open?
BTC rose from 7,357.64 to 8,184.98 (+11.24%) and ETH from 135.37 to 146.54 (+8.25%). Both weekly lows came in the first hour of Monday 6 January. BTC's return ranked at the 88th percentile of the prior 99 weeks, yet BTC was 41.37% below its 52-week high.
What the data shows. BTC set its low of 7,346.76 at 00:00 UTC on Monday 6 January and its high of 8,455 at 00:00 UTC on Wednesday 8 January, so the low came before the high and the week closed at 75.6% of its own range, in the upper third. The largest hourly move, +3.52%, fell in that same Wednesday hour, and the best day was Monday (+5.44%). Dollar volume was 3.98bn, or 1.52 times its prior twelve-week average. ETH gained 8.25% on the same Monday low of 134.86, but its high of 148.05 arrived later, at 17:00 UTC on Saturday 11 January, and it closed at 88.6% of its range. Hourly correlation between the two was 0.83.
What it does not show. The returns ranked at the 88th percentile for BTC and the 83rd for ETH, but the comparison set is only 99 weeks long. BTC was still 41.37% below its 52-week high and ETH 59.05% below, so a strong week sits inside a longer decline from those highs. Three of the four prior weeks for BTC were down, so a reversal reading is plausible, not proven. Candles carry no information about who was buying.
What a careful desk would check. Realised volatility, the size of actual swings scaled to a yearly figure, was 63.6% for BTC and 64.8% for ETH, moderate rather than stressed. The 3.52% hourly move is the test for stop placement, not the weekly average. The week opened just 0.15% above its low, so early longs faced almost no adverse excursion. Funding was positive but small and flat: BTC averaged 0.0105% per eight hours and ETH 0.01%, so longs paid shorts a modest carry with no sign of crowding.
Ether against Bitcoin. ETH trailed BTC by 2.99 percentage points, and the ETH/BTC ratio fell 2.69%. ETH volume was 1.03 times its prior twelve-week average while BTC's was 1.52 times, so the extra activity sat in Bitcoin. The two peaks landing three days apart is worth noting, not explaining.
What would change this reading
- If BTC closes a later week below its Monday low of 7,346.76, this week's gain reads as a bounce that was absorbed.
- If BTC holds above its weekly open of 7,357.64 while volume falls back towards the twelve-week average, the advance is thinning in participation.
- If the ETH/BTC ratio keeps falling beyond this week's -2.69%, ETH's weaker move is a trend rather than a one-week lag.
- If funding moves well above 0.0178% per eight hours while price stalls, the long side has become crowded.
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; 88th means 88% of the prior 99 weeks were lower
- funding rate
- the periodic payment between long and short holders of a perpetual futures contract; positive means longs pay shorts