Week of 3 February 2020: Ether gains 21.23% while Bitcoin adds 8.79%
When both assets post strong weekly gains but one rises more than twice as fast as the other, what does the spread between them tell a careful observer about risk?
BTC rose from 9,331.59 to 10,151.75 (+8.79%) and ETH from 188.48 to 228.49 (+21.23%). The ETH/BTC ratio gained 11.43%, so the week was not a uniform move. Both closed in the upper third of their ranges, with lows on Tuesday and highs on Sunday.
What the data shows. In both markets the low preceded the high: each set its low in the middle of the UTC day and its high early in the UTC day. BTC's low of 9,093.01 came at 13:00 UTC on Tuesday 4 February, and its high of 10,166.00 arrived at 07:00 UTC on Sunday 9 February, the same hour ETH set its high of 230.65. Wednesday 5 February was the best day for both (BTC +4.51%, ETH +7.87%); Tuesday 4 February was the worst (BTC -1.02%, ETH -0.44%). ETH's gain exceeded BTC's by 12.44 percentage points, and the ETH/BTC ratio rose 11.43%. Volume ran above the prior twelve-week average for both, at 1.28 times for BTC and 1.92 times for ETH. This week's return ranked at the 85th percentile of the 103 weeks on record for BTC and the 96th for ETH.
What it does not show. Hourly correlation of 0.75 places the two in the close but not tight band, so ETH's outperformance cannot be read as a shared move scaled up. The data does not identify who was buying or why the ratio shifted. Both assets remained well below their 52-week highs: BTC by 27.28% and ETH by 36.15%. A strong week inside a longer decline is not by itself evidence that the decline has ended.
What a careful desk would check. Realised volatility, the size of the swings that actually happened scaled to a yearly figure, was 36.1% for BTC and 65.7% for ETH. ETH's largest hourly move was +2.17% and occurred in the middle of the UTC day, while BTC's largest hourly move was -1.41% early in the UTC day. After four prior weeks of gains for ETH and three for BTC, a desk would ask whether sizing reflects a market that has already moved rather than one that has yet to.
What would change this reading
- If the ETH/BTC ratio gives back the 11.43% gain in a later week, this week reads as a burst of relative strength rather than a durable shift.
- If either asset trades back below its Tuesday low, 9,093.01 for BTC and 184.69 for ETH, the Sunday highs read as a peak rather than a pause.
- If funding stays positive while price stalls, longs keep paying for a position that is no longer rising.
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; the 96th percentile means 96% of the 103 weeks were lower
- funding rate
- the periodic payment between long and short holders of a perpetual futures contract; positive means longs pay shorts