Week of 22 May 2023: both assets gain about 5% on volume below the 12-week average
When a week of gains for both assets closes near its high on below-average volume, what does the price action establish, and what would need to be confirmed later?
BTC rose from 26,747.78 to 28,065.00 (+4.92%) and ETH from 1,804.91 to 1,908.64 (+5.75%). Both hit their lows in the same hour, 01:00 UTC on Thursday 25 May, and closed in the upper third of their ranges. Dollar volume was 0.26 times the prior 12-week average for BTC and 0.61 times for ETH.
What the data shows. BTC gained 4.92% and ETH 5.75%, with both moving in the same direction. The two assets set their weekly lows in the same hour, 01:00 UTC on Thursday 25 May (BTC 25,871.89, ETH 1,761.41), and their highs late on Sunday 28 May. Both closed in the upper third of their weekly ranges (BTC 91.8%, ETH 93.6%), and Sunday was the best day for both (BTC +4.51%, ETH +4.30%) after Wednesday 24 May was the worst (BTC -3.27%, ETH -2.92%). For BTC this followed three down weeks out of four (ETH had one down week out of four), and the weekly return ranked at the 71st percentile of the 275 weeks recorded. The largest hourly move was modest: -1.38% for BTC, in the hour starting 03:00 UTC on Wednesday.
What it does not show. Volume was well below its prior twelve-week average for both assets, which is consistent with a rise on light trading, but the data cannot say whether that reflects fresh buying or simply fewer sellers. It contains no order-book or positioning figures, so the composition of the move cannot be measured. It also cannot confirm that the Thursday low was a durable turning point; the week's high came in its final hours.
What a careful desk would check. Realised volatility, the size of the swings that actually happened scaled to a yearly figure, was 28.3% for BTC and 32.1% for ETH. A desk would compare the light volume reading with later weeks: if volume returns to its average while price holds above the weekly open of 26,747.78, the week reads as a steady reversal; if price falls back below the Thursday low of 25,871.89, the advance reads as a move made without participation.
Ether against Bitcoin. ETH outperformed by 0.83 percentage points and the ETH/BTC ratio rose 0.78%. ETH also sat closer to its 52-week high (-10.32%) than BTC did (-12.73%). Hourly correlation was 0.86, close but not identical. Funding was slightly positive for both (BTC averaging 0.0075% per eight hours, ETH 0.0043%), so longs paid shorts in small amounts.
What would change this reading
- If BTC trades back below its weekly open of 26,747.78 in a later week, the reversal loses its confirmation.
- If dollar volume returns towards its prior twelve-week average while price holds near 28,065.00, the light-volume objection to this week weakens.
- If the ETH/BTC ratio gives back the 0.78% gain, this week's ETH outperformance was temporary.
- If funding turns negative for either asset while price holds its gains, the small long-side cost has reversed.
Terms
- realised volatility
- how much the price actually swung over a period, expressed as a yearly percentage
- close location
- where the closing price fell within the week's high-to-low range; a reading near the top means the close sat close to the weekly high
- funding rate
- the periodic payment between long and short holders of a perpetual futures contract; positive means longs pay shorts