Week of 4 January 2021: Bitcoin +15.61% and Ether +28.20% with longs paying heavy funding
When Bitcoin and Ether both post double-digit weekly gains with funding deeply positive, what does the week reveal about momentum, and what can it not reveal about the positions behind it?
BTC rose from 33,000.05 to 38,150.02 (+15.61%) and ETH from 978.33 to 1,254.25 (+28.20%). Both hit their lows at 10:00 UTC on Monday 4 January and closed in the upper third of their ranges. ETH beat BTC by 12.59 percentage points, lifting the ETH/BTC ratio 10.9%. Funding stayed positive all week, averaging 0.1199% per eight hours for BTC and 0.1652% for ETH.
What the data shows. Both assets bottomed early and rose for most of the week. BTC fell to 28,130.00 at 10:00 UTC on Monday 4 January, then reached 41,950.00 by 15:00 UTC on Friday 8 January, a range of 49.13%. It closed at 38,150.02, in the upper third of that range, 7.97% below its 52-week high. ETH set its low of 890.00 in the same Monday hour and its high of 1,348.33 only on Sunday 10 January, closing at 1,254.25, 6.73% below its 52-week high. ETH beat BTC by 12.59 percentage points and the ETH/BTC ratio rose 10.9%, so this was a pair move with a clear leader rather than one asset dragging the other. Trading was heavy: BTC dollar volume was 2.97 times its prior twelve-week average, ETH 4.97 times. The weekly returns ranked at the 91st percentile for BTC and the 97th for ETH among 151 recorded weeks.
What it does not show. Rising prices with positive funding say nothing about who was buying or how large the positions were. The data carries no open-interest or order-book figures, so the degree of long crowding cannot be measured here. The Sunday pullback, BTC's worst day at -4.83%, does not establish whether 41,950.00 was a turning point or a pause.
What a careful desk would check. Three of the prior four weeks were up for both assets (BTC: -0.95%, 22.32%, 12.05%, 25.56%), making this the fourth up week in five. A desk would test whether its margin and stop assumptions were set on those weeks, and how a -3.88% hour for BTC (starting 02:00 UTC Friday) or a -7.11% hour for ETH (starting 03:00 UTC Tuesday) would have been absorbed. Realised volatility, the size of the swings that actually happened scaled to a yearly figure, reached 127.6% for BTC and 187.5% for ETH.
Funding. BTC funding averaged 0.1199% per eight hours, with a high of 0.2365% and a low of 0.0472%; ETH averaged 0.1652%, with a high of 0.375% and a low of 0.043%. Positive funding means long positions pay short ones. At these averages a leveraged long held through the week pays a meaningful carry, and the rate never fell below 0.0472% for BTC or 0.043% for ETH during the week.
What would change this reading
- If a later week trades below BTC's weekly low of 28,130.00 or ETH's 890.00, this week's rise reads as finished rather than paused.
- If funding falls back towards its weekly lows of 0.0472% for BTC and 0.043% for ETH while prices hold near 38,150.02 and 1,254.25, the cost of staying long eases.
- If the ETH/BTC ratio stops rising after a 10.9% weekly gain, ETH's leadership over BTC has stalled and the pair reading changes.
- If BTC's Sunday fall of -4.83% extends into a second week, the high of 41,950.00 becomes the reference point for a new drawdown.
Terms
- perpetual funding
- a regular payment between long and short holders of a perpetual futures contract; positive rates mean longs pay shorts to keep the contract close to spot
- 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 91st percentile means 91% of the 151 recorded weeks were lower