Week of 13 December 2021: Bitcoin falls 6.74% and closes in the lower third of its range
When a market falls for a third week in four on below-average volume, what does the shape of the week's range reveal about where the pressure sat?
BTC fell from 50,053.90 to 46,681.23 (-6.74%) and ETH from 4,130 to 3,924.14 (-4.98%). Both assets set their weekly highs in Monday's opening hour and fell from there. Dollar volume ran below the prior twelve-week average for both: 0.69 times for BTC, 0.86 for ETH.
What the data shows. Both assets set their weekly highs in Monday's opening hour: BTC's 50,189.97 came in the hour starting 00:00 UTC on 13 December, 0.27% above the open of 50,053.90, and ETH's 4,142.75 sat 0.31% above its open of 4,130. BTC fell to its low of 45,456.00 at 15:00 UTC on Friday 17 December, and the week's largest hourly move, -2.09%, came in the hour starting 14:00 UTC, one hour before that low. BTC closed at 46,681.23, 25.9% of the way up the week's range, placing the close in the lower third. This was the third down week in four for both assets (BTC: -10.53%, -2.29%, -13.76%, +1.33%), and the weekly return ranked at the 18th percentile of the 200 weeks on record. At the close BTC was 31.98% below its 52-week high.
What it does not show. Turnover was light: BTC dollar volume of 12.92 billion was 0.69 times its prior twelve-week average, and ETH's 11.49 billion was 0.86 times. Light volume limits what can be said about conviction behind the decline, and the data does not identify who was selling or whether positions were closed under pressure. ETH's path also differed from BTC's: after a low of 3,643.73 at 16:00 UTC on Wednesday, its largest hourly move was +4.19% three hours later, and Wednesday became its best day at +4.15%.
What a careful desk would check. Realised volatility, the size of the swings that actually happened scaled to a yearly figure, was 64.0% for BTC and 87.5% for ETH. BTC funding averaged +0.0089% per eight hours with a minimum of -0.0005%, so longs paid shorts only slightly; ETH averaged +0.0074% with a minimum of -0.006%. A week that closes low on below-average volume can resolve in either direction, so a desk would watch whether turnover expands on the next decisive move and whether the Friday low of 45,456.00 holds.
Ether against Bitcoin. Hourly correlation was 0.91, so the two moved very closely, yet ETH lost less (-4.98% against -6.74%), lifting the ETH/BTC ratio 1.88%. ETH sat 19.03% below its 52-week high against BTC's 31.98%, and its close of 3,924.14 sat mid-range while BTC's sat in the lower third.
What would change this reading
- If BTC trades back above this week's open of 50,053.90 in a later week, the decline reads as a pause inside a range rather than a continuation.
- If dollar volume rises back towards its prior twelve-week average while price holds below the week's low of 45,456.00, the light-volume decline gains support for further downside.
- If funding for either asset turns clearly negative while price keeps sliding, the modest long-side carry that persisted this week disappears.
- If the ETH/BTC ratio keeps rising beyond this week's 1.88% gain, the small relative edge for ETH starts to look like a trend rather than one week.
Terms
- realised volatility
- how much the price actually swung over a period, expressed as a yearly percentage
- close location
- where the weekly close fell between the week's low and high, expressed as a percentage of that range
- ETH/BTC ratio
- the price of one Ether expressed in Bitcoin, which rises when Ether outperforms Bitcoin