Week of 26 July 2021: Bitcoin gains 12.62% and Ether 16.71% on below-average volume
When both assets post one of their strongest weeks in over three years on lighter than usual trading volume, what can the data say about the move's strength, and what can it not say?
BTC rose from 35,381.02 to 39,845.44 (+12.62%) and ETH from 2,189.82 to 2,555.69 (+16.71%). Both gains were strong relative to history, at the 86th and 91st percentile of the 180 weeks recorded, yet dollar volume was below the prior twelve-week average for both assets.
What the data shows. Both assets rose in the same direction, with Ether ahead by 4.09 percentage points. BTC set its low of 35,205.78 in the first hour of Monday 26 July and its high of 42,599 in the early hours of Sunday 1 August, a 21.00% range from low to high. ETH followed the same low-before-high path, reaching 2,697.61 late on Sunday. ETH never posted a down day: its weakest daily return was +0.06% on Wednesday 28 July, while its best was +3.56% on Thursday 29 July. BTC's best day was Tuesday 27 July (+5.95%) and its worst Sunday 1 August (-3.90%). Hourly correlation was 0.88, so the two moved closely but not identically. Both closed well below their highs: BTC at 38.30% and ETH at 41.02% below their 52-week highs.
What it does not show. Volume was 0.91 times BTC's and 0.66 times ETH's prior twelve-week average, so the price gain came with less trading activity than usual. The data cannot say whether that reflects conviction or thin liquidity, and it identifies no buyer type or cause. A high percentile return does not indicate what follows.
What a careful desk would check. Realised volatility, the size of the swings that actually happened scaled to a yearly figure, was 91.6% for BTC and 88.3% for ETH. BTC's largest hourly move was +4.20% in the hour starting 01:00 UTC on Monday, and ETH's was -4.14% starting 20:00 UTC the same day. A desk would ask whether the week's close in the middle of the range for BTC (62.8%) signals unresolved positioning, and would treat the lighter volume as a reason to verify fills.
Ether against Bitcoin. The ETH/BTC ratio rose 3.63%, so this was a broad advance in which Ether outperformed, not a Bitcoin-only move.
What would change this reading
- If dollar volume stays below the prior twelve-week average in later weeks while prices hold near these closes, the advance reads as a low-participation move.
- If BTC trades below this week's low of 35,205.78, the weekly gain is undone at its base.
- If the ETH/BTC ratio gives back the 3.63% gain, Ether's outperformance was temporary rather than a shift in leadership.
- If funding for ETH stays above its 0.0096% eight-hour average while price stalls, longs are paying to hold a position that is no longer rising.
Terms
- percentile
- the share of past weeks with a lower value; the 91st percentile means 91% of the 180 recorded weeks were lower
- realised volatility
- how much the price actually swung over a period, expressed as a yearly percentage
- ETH/BTC ratio
- the price of one Ether measured in Bitcoin; rising means Ether is outperforming Bitcoin