Week of 25 January 2021: Bitcoin gains 2.58% while Ether loses 5.72%
When Bitcoin rises in a week while Ether falls, and both swing more than 20% inside the week, what does the divergence tell us about the move, and what does it leave open?
BTC rose from 32,259.45 to 33,092.98 (+2.58%) while ETH fell from 1,392.19 to 1,312.55 (-5.72%), a gap of 8.3 percentage points. Both swung widely: BTC's week ranged 31.77% and ETH's 22.2%. The ETH/BTC ratio fell 8.1%, and hourly correlation was 0.73.
What the data shows. BTC closed at 33,092.98, up 2.58% from its open of 32,259.45, but the week covered a range of 31.77%: the low of 29,241.72 came at 14:00 UTC on Wednesday 27 January and the high of 38,531.90 at 13:00 UTC on Friday 29 January. ETH closed at 1,312.55, down 5.72% from 1,392.19, and set its high of 1,475.0 in the first hour of the week, at 00:00 UTC on Monday 25 January. Both assets bottomed in the same Wednesday hour. Their best day was 28 January (BTC +9.89%, ETH +7.33%) and their worst 27 January (BTC -6.46%, ETH -9.33%). Dollar volume was above its prior twelve-week average for both: 25.01bn for BTC (1.54 times) and 14.99bn for ETH (1.95 times).
What it does not show. The candles record where price went, not who traded or why. Nothing here explains why BTC ended higher while ETH ended lower, or whether the Friday high of 38,531.90 was met with selling or simply marked the top of the week. BTC ended 20.17% below its 52-week high and ETH 9.91% below its own, but the data does not say whether either gap would close.
What a careful desk would check. Realised volatility, the size of the swings that actually happened scaled to a yearly figure, was 138.1% for BTC and 124.8% for ETH. The largest one-hour move was 12.32% for BTC in the hour starting 08:00 UTC on Friday 29 January, against 4.59% for ETH in the hour starting 15:00 UTC on Wednesday 27 January. A position sized for an ordinary week could be far too large here. Both closes sat in the middle third of their week's range (BTC 41.5%, ETH 39.4%), so neither held its high.
Ether against Bitcoin. The ETH/BTC ratio fell 8.1%, and ETH underperformed BTC by 8.3 percentage points. Hourly correlation was 0.73, in the band labelled close, so the two moved together for much of the week yet finished in opposite directions. Funding was positive for both and higher for ETH: 0.0659% per eight hours on average against 0.0344% for BTC. A positive rate means long positions paid short ones.
What would change this reading
- If a later week trades below this week's low of 29,241.72, the Friday high of 38,531.90 reads as a rebound inside a wide swing rather than a fresh leg up.
- If ETH keeps underperforming after this week's -8.1% move in the ETH/BTC ratio, the divergence reads as a sustained relative shift rather than one week of noise.
- If funding stays positive at this week's averages of 0.0344% for BTC and 0.0659% for ETH while BTC keeps ranging 31.77% in a week, leveraged longs pay carry through a range that closes near its middle.
Terms
- realised volatility
- how much the price actually swung over a period, expressed as a yearly percentage
- funding rate
- a regular payment between long and short holders of a perpetual futures contract; positive means longs pay shorts
- ETH/BTC ratio
- the price of Ether expressed in Bitcoin, showing which of the two assets gained ground against the other