Week of 7 February 2022: Bitcoin ends flat while Ether falls 6% and closes near its low
When Bitcoin trades sideways and Ether falls within the same week, how much of the move is a Bitcoin story, and what can price and volume alone establish?
BTC went from 42,380.87 to 42,053.66 (-0.77%), ETH from 3,055.00 to 2,871.13 (-6.02%). Both moved in the same direction but by different amounts, so the ETH/BTC ratio fell 5.29%. Both closed in the lower third of their weekly range on volume at or below the prior twelve-week average.
What the data shows. BTC closed at 42,053.66, down 0.77% on the week; ETH closed at 2,871.13, down 6.02%. Both moved in the same direction, but by different amounts, so the ETH/BTC ratio — the price of Ether measured in Bitcoin — dropped 5.29%. The two still moved closely hour by hour (hourly correlation 0.89). BTC set its low of 41,645.85 in Monday's first hour, then its high of 45,821.00 on Thursday 10 February at 17:00 UTC, and gave the gain back; the close sat at 9.8% of the weekly range. ETH ran the other way: its high of 3,283.66 came Thursday at 11:00 UTC and its low of 2,836.70 on Sunday 13 February at 18:00 UTC, leaving the close at 7.7% of the range. Neither move came on heavy turnover: BTC volume was 0.96 times its prior twelve-week average, ETH 0.82 times. The largest hourly moves were +2.96% for BTC on Tuesday and -3.67% for ETH on Thursday.
What it does not show. The data records the divergence, not its cause. Nothing here identifies who was selling Ether, or whether the ratio move reflects ETH weakness or BTC holding. Both assets' prior four weeks ran the same way (three up, one down), so the split in outcomes is new this week, and the data cannot say whether it persists or reverses.
What a careful desk would check. Both assets sit far below their 52-week highs: BTC 38.73% and ETH 40.76%. ETH's weekly return ranked at the 23rd percentile of the 208 weeks on record, BTC's at the 38th, so these were weak but not extreme weeks. Realised volatility — the size of the swings that actually happened, scaled to a yearly figure — was 62.8% for BTC and 76.4% for ETH. ETH's largest hourly move of -3.67% landed within two hours of its weekly high, so a desk would ask whether stops and hedges would have held through that hour, and whether an ETH position sized on BTC volatility is too large.
Funding. BTC funding averaged 0.0052% per eight hours (range -0.0096% to 0.0100%) and ETH 0.0033% (range -0.0113% to 0.0100%), a small cost to longs on both, since positive funding means longs pay shorts; the negative readings mark the hours when that payment ran the other way.
What would change this reading
- If ETH closes a later week back above its open of 3,055.00 while BTC holds 42,053.66, this week reads as a one-week rotation of preference rather than a trend.
- If the ETH/BTC ratio falls further while both assets rise, the divergence concerns relative demand, not market direction.
- If funding for either asset turns more negative than its weekly low (-0.0096% for BTC, -0.0113% for ETH), longs would be paid to hold rather than paying, which changes the carry on a leveraged position.
- If BTC trades below its weekly low of 41,645.85, the flat week reads as a pause before further decline rather than stability.
Terms
- ETH/BTC ratio
- the price of Ether expressed in Bitcoin; it rises when Ether outperforms Bitcoin and falls when it lags
- hourly correlation
- how closely two prices moved together hour by hour, from -1 to 1
- funding rate
- the periodic payment between long and short holders of a perpetual futures contract; positive means longs pay shorts