Week of 3 October 2022: both assets rise 2-4% on volume at or below the prior average
When two crypto assets post modest weekly gains far below their 52-week highs on unremarkable volume, what can the week's price path say, and what can it not say about the trend?
BTC rose from 19,057.74 to 19,439.02 (+2.00%) and ETH from 1,276.72 to 1,323.13 (+3.64%). Both lows came at the week's open on Monday 3 October; BTC's dollar volume was 0.98 times its prior 12-week average and ETH's was 0.39 times. BTC closed in the lower third of its weekly range.
What the data shows. Both assets set their lows at the very start of the week (BTC 18,959.68, ETH 1,263.04, both at 00:00 UTC Monday 3 October), then traded higher. BTC reached 20,475.00 on Tuesday 4 October, its best day at +3.61%, while ETH peaked later, at 1,383.99 on Thursday 6 October. Both assets then gave back ground: Friday 7 October was the worst day for each (BTC -2.16%, ETH -1.55%) and produced the largest hourly move of the week, -1.91% for BTC and -1.73% for ETH in the hour starting 12:00 UTC. BTC closed at 31.6% of its weekly range, in the lower third, having retraced much of the early gain. ETH outperformed by 1.64 percentage points and the ETH/BTC ratio rose 1.6%. The two moved closely (hourly correlation 0.88). BTC dollar volume of 33.5 billion was about equal to its prior twelve-week average (0.98 times); ETH's 3.88 billion was well below (0.39 times).
What it does not show. A +2.00% week ranks at the 56th percentile of the 242 weeks of history, so this was an ordinary week by past standards. Neither the candles nor the volume figures say why prices rose or who traded. The week's return does not establish whether the prior weeks' mixed direction (BTC up 9.13%, down 11.04%, down 3.14%, up 1.32%) has resolved either way, and both assets remain far below their 52-week highs (BTC -71.68%, ETH -72.70%).
What a careful desk would check. Realised volatility, the size of the swings that actually happened scaled to a yearly figure, was 36.0% for BTC and 40.2% for ETH, both modest. Volume near or below the prior average suggests the gain was not driven by an unusual amount of trading; a desk would ask whether later weeks confirm it with heavier volume or erase it.
Funding. BTC perpetual funding averaged +0.0077% per eight hours, with a minimum of +0.0018% and a maximum of +0.01%, so longs paid shorts throughout. ETH funding averaged +0.0026% per eight hours, ranging from -0.0052% to +0.01%, so longs paid shorts on average but the rate dipped negative at least once during the week.
What would change this reading
- If a later week closes below this week's low of 18,959.68 for BTC, the Monday start reads as the top of a range rather than a base.
- If ETH volume recovers from 0.39 times its prior twelve-week average while the ratio keeps rising, ETH's outperformance is being confirmed by trading activity.
- If funding for either asset turns negative while prices hold their gains, the long side is no longer paying to stay in.
- If the Friday 7 October hourly drop of -1.91% for BTC is followed by larger hourly moves, the calm volatility reading was specific to this week.
Terms
- realised volatility
- how much the price actually swung over a period, expressed as a yearly percentage
- close location
- where the week's close sits within the week's high-to-low range, in percent
- perpetual funding
- a regular payment between long and short holders of a perpetual futures contract that keeps its price close to the spot price