Week of 24 February 2020: Bitcoin falls 14% and Ether 21% while longs keep paying funding
When a week opens at its high, closes near its low, and funding stays positive throughout, what does that combination say about the pressure on leveraged long positions?
BTC fell from 9,936.40 to 8,531.88 (-14.14%) and ETH from 274.50 to 217.81 (-20.65%). Both opened within 1% of their weekly highs and closed in the lower third of the range. Funding stayed positive for every interval, so longs paid shorts all week.
What the data shows. Both assets set their weekly high in the first hour of the week. BTC's high of 9,990.00 came in the first hour on Monday 24 February, 0.54% above the open of 9,936.40, and ETH's high of 277.20 arrived in the same hour, 0.98% above its open of 274.50. From there the week slid. Wednesday 26 February was the worst day for both (BTC -5.70%, ETH -9.22%). BTC's low of 8,411.00 came late on Sunday 1 March at 19:00 UTC, in the final hours of the week. ETH reached its low of 210.00 earlier, at 01:00 UTC on Thursday 27 February, then recovered to close at 217.81, in the lower third of its range. Both closes sat about 39% below their 52-week highs. The two assets moved closely (hourly correlation 0.89), but ETH fell 6.51 percentage points further, taking the ETH/BTC ratio down 7.59%. Both weekly returns ranked at the 8th percentile of the 106 weeks recorded before them, after three up weeks for BTC and four for ETH.
What it does not show. The candles cannot say why the selling occurred or who was selling. ETH's largest hourly move was a +4.26% bounce at 18:00 UTC on Wednesday, two hours after BTC's largest hourly move (-2.73%). A bounce inside a down week does not establish a bottom, and BTC printed its low days later. Nothing here shows whether the decline continued.
What a careful desk would check. BTC's realised volatility (the size of the swings that actually happened, scaled to a yearly figure) was 56.6% and ETH's 105.1%, roughly double. A hedge ratio set during the four prior up weeks would have drifted, since ETH/BTC fell 7.59% in seven days. Volume supports the read that the move was widely traded: BTC dollar volume was 1.31 times its prior twelve-week average and ETH's 2.61 times.
Funding. Perpetual funding stayed positive at every eight-hour interval: BTC averaged 0.0324% with a high of 0.0623%, ETH averaged 0.0362% with a high of 0.0798%. The minimum for both was 0.01%, so no interval turned negative. Leveraged longs paid to hold while price fell 14.14% and 20.65%.
What would change this reading
- If BTC trades below the week's low of 8,411.00 in a later week, Sunday's late low reads as a pause rather than support.
- If funding turns negative while price keeps falling, the payment shifts from longs to shorts and the crowded side has changed.
- If the ETH/BTC ratio recovers part of its 7.59% drop, the extra weakness in Ether reads as relative positioning rather than a lasting divergence.
Terms
- funding rate
- the periodic payment between long and short holders of a perpetual futures contract; positive means longs pay shorts
- 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 8th percentile means 8% of the prior 106 weeks were lower