Week of 22 March 2021: Bitcoin and Ether fall on thin volume while longs keep paying funding
When both assets close lower on below-average trading volume but funding stays positive and Friday rebounds, is the market signalling exhaustion or simply consolidating after two volatile weeks?
BTC fell from 57,351.56 to 55,777.63 (-2.74%) and ETH from 1,783.23 to 1,687.01 (-5.40%). Both set their weekly highs on Monday 22 March and bottomed mid-week before a Friday bounce of +7.28% (BTC) and +7.13% (ETH). Dollar volume ran at 0.90x the prior 12-week average for BTC and 0.49x for ETH.
What the data shows. BTC opened at 57,351.56 and closed at 55,777.63 (-2.74%); ETH opened at 1,783.23 and closed at 1,687.01 (-5.40%). Both weekly highs landed on Monday 22 March at 10:00 UTC (BTC 58,430.73; ETH 1,807.51). BTC's low was 50,427.56 on Thursday 25 March at 13:00 UTC, giving a 15.87% range; ETH's low was 1,536.92 on Wednesday 24 March at 22:00 UTC, a 17.61% range. Monday was the worst day for both (-5.70% BTC, -5.73% ETH) and Friday 26 March the best (+7.28% BTC, +7.13% ETH). BTC closed at 66.8% of its weekly range, ETH at 55.5%. BTC finished 9.52% below its 52-week high, ETH 16.85% below. The four prior weeks were mixed for BTC (-21.38%, 12.93%, 15.72%, -2.75%).
What it does not show. The data cannot explain the decline. Positive funding throughout means long positions paid short ones on average, but it does not identify who held them or how large those positions were; there is no open-interest figure here. The Friday rebound does not establish that the mid-week low will hold, and thin volume leaves the price path poorly attested rather than decisive.
What a careful desk would check. Realised volatility, the size of the swings that actually happened scaled to a yearly figure, was 73.7% for BTC and 72.5% for ETH. The largest hourly moves were -2.26% for BTC (Wednesday, 22:00 UTC) and -3.50% for ETH (Monday, 20:00 UTC), both late in the UTC day. Dollar volume of 24.25bn for BTC (0.90x its prior 12-week average) and 6.55bn for ETH (0.49x) was light; a desk would ask whether stop orders could have been filled cleanly at those prices and treat this week's 25th-percentile return among 162 recorded weeks as a middling-to-weak week rather than an extreme.
Ether against Bitcoin. Hourly correlation was 0.86, close but not lockstep. ETH fell 2.66 percentage points more than BTC and the ETH/BTC ratio dropped 2.73%, so the decline was broad but weighted towards Ether, which also sits deeper below its 52-week high.
What would change this reading
- If a later week trades below BTC's 50,427.56 low or ETH's 1,536.92 low, the Friday rebound reads as a pause rather than a floor.
- If volume returns towards or above the prior 12-week average while price holds above those lows, the week reads more like consolidation than distribution.
- If funding turns negative while price holds steady, the cost of holding longs disappears and the crowding reading weakens.
- If the ETH/BTC ratio keeps falling after -2.73%, the weakness is becoming an Ether-specific story rather than a shared one.
Terms
- realised volatility
- how much the price actually swung over a period, expressed as a yearly percentage
- funding rate
- the periodic payment between long and short holders of a perpetual futures contract; positive means longs pay shorts
- close location
- where the closing price sits within the week's high-to-low range, as a percentage