Week of 17 May 2021: Bitcoin falls 25% and Ether 41% in one week
When two crypto assets fall together in one week but by very different amounts, what does the gap between their losses tell a reader, and what can this price data not explain?
BTC fell from 46,426.83 to 34,655.25 (-25.36%) and ETH from 3,581.81 to 2,096.39 (-41.47%). Both weekly returns sat at the very bottom of 170 weeks of history (1st and 0th percentile). Dollar volume ran 1.95 times (BTC) and 2.98 times (ETH) the prior 12-week average.
What the data shows. Both assets set their weekly high in the first hour on Monday 17 May, then fell for most of the week. BTC reached its low of 30,000 at 13:00 UTC on Wednesday 19 May, the same day as its worst day (-14.38%) and its largest hourly move (-8.95% in the hour starting 12:00 UTC). ETH's worst day and largest hourly move (-27.74% and -13.08%) came in the same Wednesday hours. Thursday 20 May was the best day for both (BTC +10.51%, ETH +13.52%). The two prices moved very closely hour by hour (correlation 0.90), but ETH fell further, so the ETH/BTC ratio — the price of Ether measured in Bitcoin — dropped 21.59%. Both closed in the lower third of their weekly range (BTC 27.9%, ETH 19.8%).
What it does not show. The candles record depth and speed, not cause. Nothing here identifies who was selling or whether any of it was forced. Notably, ETH's low (1,728.74) came late on Sunday 23 May, after BTC had already bottomed on Wednesday, so the two lows did not share a moment even though the hourly moves matched closely.
What a careful desk would check. Realised volatility, the size of the swings that actually happened, ran at 192.5% a year for BTC and 285.2% for ETH. Stops and position sizes set for calmer weeks would be tested by an 8.95% and 13.08% single hour. A desk would also ask whether ETH's Sunday low, made while BTC held above its Wednesday floor, marks a genuine decoupling or a lag.
Ether against Bitcoin. With a 16.11 percentage point gap in weekly returns, this was not one uniform move. ETH entered the week after three rising weeks (+3.79%, +27.11%, +33.05%) and one falling week (-8.71%), while BTC had been mixed (-12.61%, +15.31%, +2.94%, -20.28%), so part of the gap may reflect different starting points rather than different reactions.
What would change this reading
- If the ETH/BTC ratio keeps falling while BTC holds above its weekly low of 30,000, the gap is a trend rather than a one-week lag.
- If funding stays negative after the mid-week lows (as low as -0.0897% for BTC and -0.3563% for ETH), short positions are paying to stay open, which is worth watching for a crowded side.
- If a later week closes back above this week's opens of 46,426.83 (BTC) and 3,581.81 (ETH), the week reads as a shock absorbed rather than a lasting repricing.
Terms
- realised volatility
- how much the price actually swung over a period, expressed as a yearly percentage
- ETH/BTC ratio
- the price of Ether measured in Bitcoin; it rises when Ether outperforms Bitcoin and falls when it lags
- funding rate
- the periodic payment between long and short holders of a perpetual futures contract; negative means shorts pay longs