Week of 16 August 2021: Bitcoin adds 4.82% while Ether slips 2.10% after four up weeks
After four consecutive rising weeks, what does it mean when Bitcoin and Ether finally move in opposite directions, and which of the two is showing the stronger trend?
BTC rose from 46,973.82 to 49,239.22 (+4.82%) while ETH fell from 3,307.35 to 3,238.00 (-2.10%). Both had closed higher in each of the prior four weeks. Dollar volume for both ran below their prior 12-week averages (0.86x BTC, 0.87x ETH), and the ETH/BTC ratio dropped 6.6%.
What the data shows. BTC and ETH moved in opposite directions after four straight up weeks for both. BTC set its low of 43,927.70 at 04:00 UTC on Thursday 19 August, then rallied to 49,757.04 on Saturday 21 August, closing at 91.1% of the week's range. Its best day, Friday 20 August, added 5.48%. ETH set its high of 3,335.00 in the week's first hour, fell to 2,950.00 by 01:00 UTC on Wednesday 18 August, then closed at 3,238.00, or 74.8% of the week's range, still below its open. The two still moved together hour by hour (correlation 0.89), but ETH fell further, so the ETH/BTC ratio lost 6.6%. Volume was below the prior twelve-week average for both, so the divergence came with lighter trading, not heavier.
What it does not show. Divergence in weekly returns does not say why one asset outperformed the other. The data has no positioning or order-book figures, so the shift between the two cannot be attributed to any particular flow. Nor does it show whether the split persists: this is one week against a 183-week history, and BTC's +4.82% ranked at the 66th percentile, ETH's -2.10% at the 34th.
What a careful desk would check. BTC sits 23.75% below its 52-week high and ETH 25.27% below its own, so both remain in a pullback despite the strong prior weeks. Realised volatility was moderate for BTC (58.2% annualised) and higher for ETH (72.2%). A desk would ask whether ETH's weaker week is a one-week lag behind BTC or the start of a sustained relative decline, and whether its ETH/BTC hedge was sized for a 6.6% weekly ratio move.
Funding. Both markets paid longs throughout. BTC perpetual funding averaged 0.0115% per eight hours (range 0.01% to 0.02%); ETH averaged 0.0152% (range 0.01% to 0.0367%). The steady positive rate in a week when ETH fell 2.10% points to longs paying to stay in during a decline.
What would change this reading
- If ETH continues to underperform, the 6.6% drop in the ETH/BTC ratio marks the start of a reallocation rather than a one-week stumble.
- If BTC trades above its weekly high of 49,757.04 on heavy volume, the fifth consecutive up week strengthens the trend the prior four established.
- If funding turns negative for either asset while prices hold near these levels, the cost of holding longs stops supporting the move.
- If later weeks show volume returning towards or above the prior 12-week average, this week's divergence reads as conviction forming; on light volume it reads as indecision.
Terms
- ETH/BTC ratio
- the price of one Ether expressed in Bitcoin; it rises when Ether outperforms Bitcoin and falls when it lags
- realised volatility
- how much the price actually swung over a period, scaled to an annual percentage
- perpetual funding
- a regular payment between long and short holders of a perpetual futures contract; positive means longs pay shorts