Week of 24 January 2022: Bitcoin and Ether rise from a deep Monday low on thin volume
When prices rebound from an early-week low after several falling weeks but do so on below-average trading volume, what does the recovery establish about the market, and what does it leave unresolved?
BTC rose from 36,244.55 to 37,881.76 (+4.52%) and ETH from 2,539.0 to 2,601.68 (+2.47%). Both set their lows on Monday 24 January and their highs at 19:00 UTC on Wednesday 26 January. Dollar volume stayed below the prior twelve-week average for both assets.
What the data shows. The week's low came first. BTC touched 32,917.17 at 13:00 UTC on Monday 24 January, ETH reached 2,159.0 at 15:00 UTC the same day, and the largest one-hour move of the week for both assets fell in the hour starting 10:00 UTC that Monday (BTC -3.58%, ETH -5.13%). From there both assets recovered to a shared high at 19:00 UTC on Wednesday 26 January (BTC 38,919.98, ETH 2,722.0). The week's range was 18.24% for BTC and 26.08% for ETH. BTC's daily moves after Monday stayed small: its best day was 28 January at 1.5% and its worst was 30 January at -0.75%. ETH's best day was also 28 January at 4.99% and its worst was 24 January at -3.93%. Both closed in the upper third of their weekly range (BTC 82.7%, ETH 78.6%). Dollar volume was 0.88 of the prior twelve-week average for BTC and 0.89 for ETH. The prior four weeks had been mostly falling for both assets (BTC -6.87%, -11.47%, 2.88%, -15.85%).
What it does not show. Volume below the prior twelve-week average means fewer dollars changed hands than usual. It does not say who was buying or whether the rebound had conviction behind it. Nothing here shows what came after Sunday, or whether Wednesday's high held.
What a careful desk would check. Realised volatility, the swings that actually occurred scaled to a yearly figure, was 82.3% for BTC and 117.7% for ETH. ETH also fell further below its 52-week high (-46.32% versus -44.81% for BTC). A desk would ask whether position sizing reflects ETH's larger range rather than BTC's.
Ether against Bitcoin. The two moved closely (hourly correlation 0.91), but the ETH/BTC ratio fell 1.96% and ETH's weekly return trailed BTC's by 2.05 percentage points, so the rebound favoured Bitcoin.
What would change this reading
- If a later week trades below this week's low of 32,917.17 for BTC or 2,159.0 for ETH, the Monday rebound reads as a pause in a falling market.
- If volume rises above the prior twelve-week average while prices hold above this week's closes, the recovery gains support the week itself did not show.
- If the ETH/BTC ratio keeps falling, the relative weakness of ETH extends beyond this single week.
- If funding for BTC stays positive near 0.0014% per eight hours while ETH stays near -0.0026%, the two markets carry different positioning.
Terms
- realised volatility
- how much the price actually swung over a period, expressed as a yearly percentage
- 52-week high
- the highest price seen over the last 52 weeks, used to measure how far the market sits below its peak
- funding rate
- the periodic payment between long and short holders of a perpetual futures contract; positive means longs pay shorts