Week of 16 May 2022: a fifth straight down week on below-average volume
When a market falls for a fifth consecutive week on lighter volume than usual, what does the price path say about the decline, and what does the quiet trading activity leave unresolved?
BTC fell from 31,328.89 to 30,293.94 (-3.30%) and ETH from 2,145.29 to 2,043.19 (-4.76%). Both fell to their lows midweek, then recovered part of the loss on Thursday 19 May (BTC +5.59%, ETH +5.45%). Dollar volume was 0.74 times the prior twelve-week average for BTC and 0.73 for ETH.
What the data shows. Both assets opened the week at their weekly highs: BTC's high of 31,328.90 and ETH's 2,145.29 both sit at 00:00 UTC on Monday 16 May. BTC reached its low of 28,654.47 at 23:00 UTC on Wednesday 18 May, the week's worst day (-5.68%), a range of 9.33% from high to low. ETH's low of 1,903.18 arrived three hours later, at 02:00 UTC on Thursday 19 May, after an 8.40% down day. Thursday was the best day for both (BTC +5.59%, ETH +5.45%). The two moved closely (hourly correlation 0.96) and the ETH/BTC ratio slipped 1.51%, so neither asset meaningfully left the other behind. BTC closed at 61.3% of its weekly range, in the middle third of the week's range.
What it does not show. The candles give no reason for the decline and no identity for the sellers. Volume below the prior twelve-week average (0.74 times for BTC, 0.73 for ETH) shows less trading activity than usual, but it cannot distinguish reduced selling from reduced interest. Thursday's rebound does not establish that the low held.
What a careful desk would check. This was a fifth consecutive down week for BTC (prior four: -0.57%, -2.49%, -11.52%, -7.96%), with this week's return at the 26th percentile of 222 recorded weeks. At the close BTC was 55.86% below its 52-week high and ETH 57.84% below. Realised volatility, the size of the swings that actually happened scaled to a yearly figure, was 65.1% for BTC and 76.8% for ETH. A desk would compare the 9.33% weekly range against its risk limits and ask whether the recovery to the upper range was broad or thin, given the volume.
Funding. Perpetual funding averaged 0.0038% per eight hours for BTC and 0.0030% for ETH, with intraweek extremes of 0.01% and -0.007% for BTC. Longs paid shorts, but the amount is close to zero, so leverage carried almost no cost this week.
What would change this reading
- If BTC trades below its weekly low of 28,654.47 in a later week, the Thursday rebound reads as a pause inside a continuing decline.
- If volume returns towards and above the prior twelve-week average while price holds above the close of 30,293.94, the week reads as a quiet consolidation rather than exhaustion.
- If ETH keeps falling faster than BTC, the ratio gap of -1.51% widens and the relative, not the absolute, exposure becomes the risk to recheck.
- If funding turns clearly negative while price stays near the weekly range, short positions would begin paying for their exposure.
Terms
- realised volatility
- how much the price actually swung over a period, expressed as a yearly percentage
- close location
- where the week's close sat between its low and its high, as a percentage; a higher figure means the close sat nearer the high
- percentile
- the share of past weeks with a lower value than this one