Week of 1 January 2024: Bitcoin gains 3.89% while Ether loses 2.65%
When Bitcoin and Ether move in opposite directions over a week, what does the size of the gap tell us about hedging one asset with the other?
BTC rose from 42,283.58 to 43,929.02 (+3.89%) while ETH fell from 2,281.87 to 2,221.42 (-2.65%), a gap of 6.54 percentage points. Both peaked Tuesday and bottomed Wednesday 12:00 UTC. Hourly correlation stayed high at 0.89, but the ETH/BTC ratio still dropped 6.3%.
What the data shows. BTC opened the year with its best day on 1 January (+4.48%), reached 45,879.63 on Tuesday, then reversed: Wednesday 3 January was the worst day for both assets (BTC -4.68%, ETH -6.18%), with BTC's largest hourly move (-3.21%) in the hour starting 11:00 UTC and ETH's (-2.56%) at 12:00 UTC, the hour both assets set their weekly lows. BTC recovered to close 3.89% higher; ETH did not, ending 2.65% lower. Dollar volume ran above the prior twelve-week average for both (BTC 1.4 times, ETH 1.24 times). BTC finished 4.0% below its 52-week high, ETH 8.67% below.
What it does not show. The candles record the divergence, not its cause. Nothing here identifies which asset was being bought or sold, or why the recovery in BTC did not lift ETH. The Wednesday reversal could reflect one asset catching up or two separate moves; the data cannot separate them.
What a careful desk would check. Realised volatility, the size of the swings that actually happened scaled to a yearly figure, was 55.2% for BTC and 53.5% for ETH, yet the weekly returns sit at the 68th and 31st percentiles of the 307 weeks of history. A hedge sized on the assumption that the two assets move together would have been off by 6.54 percentage points this week. A desk would ask whether its ETH exposure was actually protected by a BTC position and how the largest hourly moves of -3.21% and -2.56% interacted with its stop levels.
Ether against Bitcoin. Hourly correlation was 0.89, so the two prices tracked each other closely hour by hour, yet the week's directions differed and the ETH/BTC ratio fell 6.3%. Close hourly correlation and a falling ratio are compatible here: the assets shared most hourly ups and downs, but ETH's losses were larger than its gains relative to BTC, enough to leave it lower over the full week. Funding was positive for both (BTC averaging 0.0201% per eight hours, ETH 0.0216%), so long positions on both sides were paying shorts during a week when only one side gained.
What would change this reading
- If ETH closes a later week above its open of 2,281.87 while BTC holds near 43,929.02, the ratio decline reads as a one-week gap rather than a shift in relative trend.
- If funding stays positive while ETH price keeps falling below 2,100.0, longs are paying to hold a position that is not rising.
- If BTC trades back below its weekly low of 40,750.0, the week's gain reads as a range move that failed rather than a trend.
Terms
- funding rate
- a periodic payment between long and short holders of a perpetual futures contract; positive means longs pay shorts
- percentile
- the share of past weeks with a lower value; the 68th percentile means 68% of the prior 307 weeks were lower
- ETH/BTC ratio
- the price of one Ether expressed in Bitcoin, showing which asset is gaining against the other