Week of 31 May 2021: Ether gains 13.67% while Bitcoin ends the week near flat
When two closely correlated assets share the same week's path but end far apart in return, what does the split say about relative strength, and what can it not say about the weeks ahead?
BTC rose just 0.44% (35,641.26 to 35,796.31) while ETH gained 13.67% (2,385.82 to 2,711.92), a 13.23-point gap. Hourly correlation was 0.92 and both assets set highs at the same hour on Thursday 3 June. BTC volume was 0.66 times its prior 12-week average.
What the data shows. Both assets fell early, hitting their lows within hours of Monday's open (BTC 34,153.84 at 04:00 UTC, ETH 2,271.44 at 03:00 UTC), then rose to weekly highs in the same hour on Thursday 3 June (BTC 39,476.00, ETH 2,891.95). After that, they diverged in outcome: ETH's weekly return ranked at the 85th percentile of its 172 weeks of history, while BTC's ranked at the 45th. The close locations tell the same story. BTC closed at 30.9% of its weekly range, in the lower third, while ETH closed at 71.0%, in the upper third. The ETH/BTC ratio rose 13.18%, so this was Ether moving away from Bitcoin rather than a broad move of both. Both drew down from May: the prior four weeks included -20.28% and -25.36% for BTC and -8.71% and -41.47% for ETH.
What it does not show. Candles record the path, not the reason. High hourly correlation (0.92) does not tell us which asset led hour by hour, and the data cannot say why ETH held its gains while BTC gave most of them back. A single week of outperformance does not establish a trend in the ratio.
What a careful desk would check. Realised volatility, the size of the actual swings scaled to a yearly figure, was 84.3% for BTC and 116.7% for ETH. BTC's dollar volume of 19.49 billion was 0.66 times its prior twelve-week average, so the flat weekly close came on lighter activity. ETH's volume of 19.43 billion was about equal to its average. A desk would note that the largest hourly move for both was a drop, -3.85% for BTC and -3.74% for ETH, in the hour starting 09:00 UTC on Saturday 5 June, and that BTC closed the week at 30.9% of its range, in the lower third.
What would change this reading
- If the ETH/BTC ratio keeps rising in later weeks, this week's 13.18% gain reads as the start of a shift rather than a one-week divergence.
- If BTC closes a later week near the top of its range rather than the lower third, the weak finish here reads as a pause within a recovery.
- If realised volatility for either asset falls back well below this week's 84.3% and 116.7%, the swings seen here were temporary.
- If BTC volume returns towards its prior twelve-week average while price holds, this week's flat close on light activity reads as indifference rather than selling.
Terms
- realised volatility
- how much the price actually swung over a period, expressed as a yearly percentage
- close location
- where the closing price sits between the week's low and high, as a percentage
- ETH/BTC ratio
- the price of Ether measured in Bitcoin; it rises when Ether outperforms Bitcoin