Week of 4 April 2022: Bitcoin and Ether fall about 9% on ordinary volume
When two assets fall by nearly the same amount on unremarkable turnover, what does the shape of the week say about the decline, and what does it leave unresolved?
BTC fell from 46,407.36 to 42,158.85 (-9.15%) and ETH from 3,521.90 to 3,203.04 (-9.05%). Both peaked at 12:00 UTC on Tuesday 5 April and closed in the lower third of their ranges. BTC volume was 0.91 times its prior twelve-week average; the weekly return ranked at the 15th percentile of 216 weeks.
What the data shows. BTC opened Monday 4 April at 46,407.36 and closed Sunday at 42,158.85, a -9.15% week. ETH fell by almost the same amount, from 3,521.90 to 3,203.04 (-9.05%). Both assets set their weekly high in the same hour, Tuesday 5 April at 12:00 UTC (BTC 47,200.00, ETH 3,555.00), and both set their low after their high. BTC's low of 41,868.00 came last, at 22:00 UTC on Sunday 10 April; ETH reached its low of 3,143.15 much earlier, at 00:00 UTC on Thursday 7 April. Wednesday 6 April was the worst day for both (BTC -5.11%, ETH -7.00%), and Saturday 9 April the best (BTC +1.19%, ETH +2.07%). The largest hourly moves were modest: BTC's largest was +1.97% and ETH's -2.42%. BTC dollar volume was 11.89 billion, or 0.91 times its prior twelve-week average; ETH's was 9.90 billion, or 1.03 times its prior twelve-week average. The two moved closely (hourly correlation 0.88).
What it does not show. Volume at or below recent averages means this was not a week of heavy turnover, and the candles cannot say whether that reflects unwillingness to trade, one-sided selling, or thin books. Neither asset registered an hourly move larger than 1.97% for BTC and 2.42% for ETH, so the loss was assembled from many small steps rather than one hour of stress. Nothing here identifies who was selling or whether the Sunday low for BTC was final.
What a careful desk would check. Realised volatility, the size of the swings that actually happened scaled to a yearly figure, was 41.2% for BTC and 52.1% for ETH. The four weeks before this one were mixed for BTC (-1.67%, 9.22%, 13.49%, -0.90%), so sizing set during the two up weeks would be tested by a -5.11% day. Both assets closed in the lower third of their range, which is consistent with sellers still present at the end of the week. Funding stayed positive for BTC all week (averaging 0.0088% per eight hours, never below 0.0024%), so longs were paying a small carry into a falling market; ETH funding averaged 0.0052% but touched -0.0145%.
Ether against Bitcoin. The ETH/BTC ratio changed only +0.11%, so this was one broad move rather than either asset leaving the other behind. Both sit well below their 52-week highs: BTC -38.57%, ETH -33.91%.
What would change this reading
- If BTC trades below this week's low of 41,868.00 in a later week, the Sunday close reads as a level that failed rather than a floor.
- If volume rises well above 0.91 times the prior twelve-week average while price keeps falling, the decline has more participation behind it than this week shows.
- If ETH begins falling faster than BTC, so the +0.11% ratio change reverses, the pair stops being a single broad move.
- If BTC funding turns negative, as ETH's did at -0.0145%, the cost of holding longs reverses and shorts begin paying instead.
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
- ETH/BTC ratio
- the price of one Ether expressed in Bitcoin, which shows which of the two is gaining or losing ground