Week of 20 June 2022: Bitcoin and Ether rise on below-average volume after weeks of falls
After a month of steep weekly losses, what does a modest up week on thin trading volume tell us about whether the selling pressure has eased, and what can it not establish about a turn in trend?
BTC rose from 20,574 to 21,038.07 (+2.26%) and ETH from 1,128.53 to 1,197.79 (+6.14%). BTC's prior week was down and ETH's prior four, so both ended a run of falls. Both set their weekly highs at 12:00 UTC on Sunday 26 June. Dollar volume stayed below the prior 12-week average: 0.77 times for BTC and 0.87 for ETH.
What the data shows. BTC set its weekly low of 19,637.03 at 01:00 UTC on Monday 20 June, within the first hours of the week, and closed in the middle third of its 11.46% range. ETH was more volatile: its low of 1,043.65 came at 20:00 UTC on Wednesday 22 June, in the same session as its worst day (-6.72%), and its range reached 22.65%. Both assets then posted their best day on Thursday 23 June (BTC +5.61%, ETH +9.0%) and their highs together at 12:00 UTC on Sunday. The two moved closely (hourly correlation 0.89), yet ETH ended 3.88 percentage points higher and the ETH/BTC ratio gained 3.80%.
What it does not show. These candles record prices and volumes, not motives. Nothing here says whether the gains came from new buying or from positions being closed, and no open-interest figures are available to separate the two. The week is one week; the prior four BTC returns were -2.73%, 1.53%, -11.18% and -22.58%, so a single positive week sits inside a much larger decline.
What a careful desk would check. Volume ran below its prior 12-week average for both assets. A rise on thinner trade is a weaker signal than a rise on heavier trade, and a desk would want to see whether participation returns before treating this as a change of direction. At the close BTC stood 69.35% below its 52-week high and ETH 75.29% below its own; drawdowns of that size can absorb many small rebounds.
Funding. BTC funding averaged 0.004% per eight hours, ETH 0.001%, with both touching 0.01% and dipping to -0.003% (BTC) and -0.0102% (ETH). Rates near zero imply neither side paid much to hold perpetual positions.
What would change this reading
- If a later week closes below this week's low of 19,637.03 for BTC, the rebound reads as a pause in the decline.
- If volume returns above its prior 12-week average while price holds above 21,038.07, the move has participation behind it.
- If ETH keeps outperforming BTC and the ETH/BTC ratio rises beyond 3.80%, the rebound is becoming a relative one.
- If funding moves well above 0.01% per eight hours while price stalls, longs are paying more to stay in place.
Terms
- realised volatility
- how much the price actually swung over the week, expressed as a yearly percentage
- perpetual funding
- a regular payment between long and short holders of a perpetual futures contract that keeps its price close to the spot price
- drawdown
- the fall from a previous peak, as a percentage of that peak