Week of 12 December 2022: both assets peak Wednesday and close in the lower third of the range
When two assets move together all week but one falls three times as far as the other, what does the gap say, and what can a week of price data not explain?
BTC fell from 17,085.05 to 16,738.21 (-2.03%) and ETH from 1,263.00 to 1,183.06 (-6.33%). Both set their highs on Wednesday 14 December and their lows on Friday 16 December. Volume ran at 0.71 times (BTC) and 0.70 times (ETH) the prior twelve-week average.
What the data shows. The week rose first and fell second. BTC reached 18,387.95 and ETH 1,352.72 at 18:00 UTC on Wednesday 14 December, about 7.63% and 7.10% above their weekly opens. Both then slid to lows at 23:00 UTC on Friday 16 December — 16,527.32 for BTC and 1,155.32 for ETH — a weekly range of 11.26% and 17.09%. Friday was also the worst day for both (-4.18% and -7.87%), after Tuesday 13 December was the best (+3.29% and +3.55%). The largest hourly moves landed in the same hour, 13:00 UTC on Tuesday (+2.7% and +3.7%). The two assets tracked each other closely (hourly correlation 0.90), but ETH fell further, so the ETH/BTC ratio dropped 4.39%. Both closed in the lower third of their weekly range.
What it does not show. The candles record the path, not the reason. Nothing here identifies who bought the Wednesday high or sold into Friday, or whether either move was forced. Volume was below its prior twelve-week average for both assets, so the week's turn happened on lighter activity; that fact alone cannot say whether demand withdrew or supply arrived. The Friday low does not tell us whether it holds.
What a careful desk would check. Realised volatility, the size of the swings that actually happened scaled to a yearly figure, was 39.6% for BTC and 54.2% for ETH. The weekly returns ranked at the 31st and 24th percentiles of the 252 weeks recorded, so this was a below-average down week, not an extreme one. Both markets sat 67.72% (BTC) and 71.38% (ETH) below their 52-week highs, and the low came after the high, so the week's shape was a fade rather than a capitulation-and-recovery.
Funding. BTC perpetual funding averaged 0.0054% per eight hours, with a high of 0.01% and a low of -0.002%; ETH averaged 0.0061%, with a low of -0.0064%. Positive funding means long positions paid short ones on average. A desk would note that the rate stayed small in both directions while the weekly range reached 11.26% (BTC) and 17.09% (ETH).
What would change this reading
- If a later week trades below Friday's lows of 16,527.32 (BTC) and 1,155.32 (ETH), the mid-week high reads as a lower high within a continuing decline.
- If the ETH/BTC ratio keeps falling beyond this week's -4.39%, the two assets are no longer moving as one market, which changes which hedge is meaningful.
- If volume returns above its prior twelve-week average while price holds the lower third of this range, the light-volume selloff was a pause rather than a completed move.
- If funding turns clearly negative while price sits near the week's lows, the cost of holding longs flips and short crowding becomes the thing to watch.
Terms
- realised volatility
- how much the price actually swung over a period, expressed as a yearly percentage
- ETH/BTC ratio
- the price of one Ether divided by the price of one Bitcoin; it falls when Ether underperforms Bitcoin
- percentile
- the share of past weeks with a lower value; the 31st percentile means 31% of past weeks were lower