Week of 22 August 2022: both assets fall about 10% and close at the bottom of the weekly range
When Bitcoin and Ether fall together and close near their weekly lows, what does the timing of the highs and lows reveal about how the week was traded, and what remains unknown?
BTC fell from 21,516.70 to 19,555.61 (-9.11%) and ETH from 1,618.13 to 1,426.76 (-11.83%). Both hit their worst day on Friday 26 August (BTC -6.11%, ETH -11.03%) and set their lows in the final hour of Sunday 28 August. Hourly correlation was 0.93 and the ETH/BTC ratio fell 2.98%.
What the data shows. BTC opened at 21,516.70 and closed at 19,555.61, down 9.11% across a 12.19% range. Its high of 21,900.00 came on Wednesday 24 August at 16:00 UTC; its low of 19,520.00 came on Sunday 28 August at 23:00 UTC. The low arrived after the high, and the close sat in the lower third of the range (close location 1.5%). ETH opened at 1,618.13, reached 1,722.00 on Thursday 25 August at 14:00 UTC, and closed at 1,426.76 near its low of 1,424.00, set in the same Sunday hour, across a 20.93% range. Friday 26 August was the worst day for both (BTC -6.11%, ETH -11.03%) and produced each asset's largest hourly move in the hour starting 14:00 UTC (-2.73% and -3.32%). BTC dollar volume was 28.26 billion, 1.29 times its prior twelve-week average; ETH volume was 9.05 billion, 0.78 times its average. Both markets remained far below their highs: BTC 71.51% and ETH 70.56% under their 52-week peaks. The weekly returns ranked at the 16th and 12th percentiles of the 236 weeks on record.
What it does not show. The candles record the path, not the cause. Nothing here identifies who was selling or whether any of it was forced. That both lows came in the final hour of the week does not tell us whether the decline continued afterwards, and the divergence in volume relative to each asset's own history cannot be attributed to any particular group of participants.
What a careful desk would check. Realised volatility, the size of the swings that actually happened scaled to a yearly figure, was 49.0% for BTC and 79.1% for ETH, consistent with ETH's wider range. ETH moved further on a smaller volume base, so a desk would ask whether ETH liquidity thinned during Friday's hour. The four prior weeks were mixed rather than trending: BTC's were 3.17%, -0.52%, 4.88% and -11.48%, and ETH's were 5.03%, 1.32%, 13.83% and -16.39%, so this week's fall does not simply extend a decline already in progress.
Funding. BTC perpetual funding averaged -0.0017% per eight hours, ranging from -0.0088% to 0.0045%. ETH averaged -0.0050%, touching -0.0272%. Negative rates mean short positions were paying long ones on average, but the magnitudes are small.
What would change this reading
- If a later week closes below 19,520.00 for BTC or 1,424.00 for ETH, this week's Sunday lows mark a continuing decline rather than a floor.
- If BTC volume falls back towards its prior twelve-week average while price holds near the close of 19,555.61, the elevated activity reads as a one-week event.
- If ETH volume rises from this week's 0.78 times its prior twelve-week average to above that average, the divergence between the two markets has closed and the pair should be read as one move again.
- If funding turns more negative while price stops falling, short positions are paying to hold and the pressure may be exhausting rather than building.
Terms
- realised volatility
- how much the price actually swung over a period, expressed as a yearly percentage
- hourly correlation
- how closely two prices moved together hour by hour, from -1 to 1; 0.93 means BTC and ETH tracked each other closely
- close location
- where the closing price fell within the week's high-to-low range; a low percentage means the close was near the bottom