Week of 27 December 2021: Bitcoin falls 6.87% on volume well below its twelve-week average
When both assets close the week lower on thin volume and well below their 52-week highs, what does the week's shape say about where the selling pressure actually sits?
BTC fell from 50,775.48 to 47,286.18 (-6.87%) and ETH from 4,063.57 to 3,828.27 (-5.79%). Both peaked in the same Monday hour and slid after. Dollar volume was 0.58 times BTC's prior twelve-week average and 0.51 times ETH's, so the decline came on light activity.
What the data shows. Both assets set their weekly high in the same hour: Monday 27 December at 17:00 UTC, BTC at 52,088.00 and ETH at 4,127.46. The rest of the week moved lower. BTC's low of 45,678.00 arrived on Friday 31 December at 20:00 UTC, a range of 14.03% from high to low; ETH's low of 3,585.00 came earlier, on Thursday 30 December at 00:00 UTC, a range of 15.13%. The worst day for both was Tuesday 28 December (BTC -6.23%, ETH -6.06%), and the best was Saturday 1 January (BTC +3.26%, ETH +2.43%). Activity was light: BTC dollar volume of 10.46 billion was 0.58 times its prior twelve-week average, and ETH's 6.52 billion was 0.51 times. The two moved closely (hourly correlation 0.92), and the ETH/BTC ratio rose 1.16%, so Ether lost slightly less.
What it does not show. Thin volume does not say whether selling was exhausted or simply absent; a quiet week can precede either recovery or a further decline. BTC closed at 25.1% of its weekly range, in the lower third, which locates the close but says nothing about the next week. Both assets sat 31.1% (BTC) and 21.01% (ETH) below their 52-week highs. The data does not identify who traded or why, and the positive best day on 1 January does not establish a turn.
What a careful desk would check. Realised volatility, the size of the swings that actually happened scaled to a yearly figure, was 53.4% for BTC and 54.3% for ETH, moderate against the declines of prior weeks in this sequence (-13.76%, -6.74% for BTC). BTC's largest hourly move was +2.63% in the hour starting 08:00 UTC on Friday 31 December, in the middle of the UTC day, a rebound inside the down week; the weekly return sat at the 18th percentile of the 202 weeks of history in the data set. A desk would ask whether sizing built during the calmer weeks still holds if the Friday low gives way.
Funding. Perpetual funding averaged 0.0094% per eight hours for BTC and 0.0072% for ETH, with highs of 0.01% and lows of -0.0031% and -0.0008%. Longs paid shorts on average, a mild carry with no extreme reading in either direction.
What would change this reading
- If a later week closes below this week's BTC low of 45,678.00, Friday's low reads as a step down rather than a floor.
- If volume returns towards the prior twelve-week average while price holds above 45,678.00, the quiet decline reads as consolidation rather than distribution.
- If funding stays near its 0.01% high while price falls further, longs are paying to hold a losing side.
- If the ETH/BTC ratio keeps rising after this week's 1.16% gain, Ether is leading within the same broad decline.
Terms
- realised volatility
- how much the price actually swung over a period, expressed as a yearly percentage
- funding rate
- the periodic payment between long and short holders of a perpetual futures contract; positive means longs pay shorts
- percentile
- the share of past weeks with a weaker result; at the 18th percentile, most of the 202 recorded weeks were stronger