Week of 24 August 2020: Ether rises 9.78% while Bitcoin ends 0.54% higher
When two crypto assets share the same midweek low but finish the week far apart, what does the price data say about the divergence, and what can it not establish?
BTC gained 0.54% to 11,711.16 and ETH 9.78% to 428.94, lifting the ETH/BTC ratio 9.19%. Both fell hard on Tuesday 25 August, then recovered, with Sunday 30 August the best day for each. Hourly correlation was 0.85.
What the data shows. Both assets dipped on Tuesday 25 August: BTC fell to 11,117.64 at 18:00 UTC (-3.66% on the day) and ETH to 370.00 at 17:00 UTC (-6.07%). Both then recovered into Sunday 30 August, the best day for each (BTC +2.14%, ETH +7.60%). ETH closed at 428.94, close to its weekly high of 429.89 set at 23:00 UTC on Sunday; its close location of 98.4% sits at the top of the week's range. BTC closed at 11,711.16, in the upper third of its range but below its Monday high of 11,824.90. The ETH/BTC ratio rose 9.19%, so this was not one shared move: ETH gained more on both the rebound and the week. The assets still moved closely hour by hour (correlation 0.85). ETH's weekly return ranked at the 79th percentile of the 132 weeks recorded, BTC's at the 48th.
What it does not show. The data records prices, not reasons. It cannot say why ETH outperformed, who was buying, or whether the Sunday strength would persist. Both assets had just completed a mixed prior month (BTC: 11.48%, 5.51%, 1.96%, -2.21%; ETH: 19.74%, 4.75%, 11.14%, -9.89%), and a ratio that rises 9.19% in one week does not establish a lasting change in relative value.
What a careful desk would check. ETH was the riskier asset by the week's own measures: a 16.19% range against BTC's 6.36%, a largest hourly move of -2.74% against -1.06%, and realised volatility of 63.4% annualised against 30.5%. ETH volume ran 1.45 times its prior twelve-week average, BTC's 1.06 times. At the week's close, BTC stood 5.72% below its 52-week high and ETH stood 2.98% below its 52-week high.
Funding. Perpetual funding stayed positive all week, averaging 0.0123% per eight hours for BTC (high 0.0426%) and 0.0143% for ETH (high 0.032%). Long positions paid short ones continuously, at modest levels relative to the week's price swings.
What would change this reading
- If the ETH/BTC ratio rises again after a 9.19% weekly gain, the divergence reads as a trend rather than a single-week event.
- If BTC closes a later week above its weekly high of 11,824.90, the Tuesday dip reads as a pause inside an advance.
- If ETH trades below its Tuesday low of 370.00, the Sunday close at the top of the range reads as a short-lived rebound.
- If ETH funding climbs above its weekly high of 0.032% while price stalls below 429.89, longs are paying more for a position that has stopped rising.
Terms
- close location
- where the week's closing price sits between the week's low and high, as a percentage
- ETH/BTC ratio
- the price of one Ether expressed in Bitcoin; it rises when Ether outperforms Bitcoin
- perpetual funding
- a regular payment between long and short holders of a perpetual futures contract; positive means longs pay shorts