Key Indicators: (January 13 4pm -> January 20 4pm Hong Kong time)

• BTC against USD up 14.8% (93.5k USD -> 107.3k USD), ETH against USD up 5.1% (3.22k USD -> 3.38k USD)

BTC Spot Technical Indicators:

• The price found strong support around 92k USD, including a brief dip below 90k USD but quickly rebounded. It then rose steadily, breaking through 100k USD to close the week, accumulating enough momentum before the Trump inauguration. After breaking 100k USD, the price experienced some pullbacks but then rebounded, setting a new all-time high with a big green candle before the Monday settlement, pausing slightly before the psychological level of 110k USD.
• From a technical perspective, the market will only activate more upward momentum after completely breaking through 110k USD, reaching our initial target range of 115-120k USD. Otherwise, if the upward breakout fails, the market will temporarily fluctuate in the broad range of 90-110k USD, implying quite volatile single-directional price movements in the coming weeks.

Market Themes:

• On the macro front, the Producer Price Index (PPI) data released on Tuesday showed weakness, paving the way for the slightly weaker-than-expected Consumer Price Index (CPI) on Wednesday. This eased market concerns about the Fed not making even a single rate cut.
• The market is nonetheless looking for opportunities to buy cryptocurrencies before Trump's inauguration. Rumors about a "pro-crypto policy" have been circulating since last week. In a more favorable macroeconomic backdrop, the market unhesitatingly pushed BTC price temporarily up to 106k USD on Friday evening. The (still needing to be specified as Trump Coin...) incident over the weekend was not a big deal, but there is a potential for damage to BTC's reputation during Trump's tenure, given the sudden wealth accumulation of the Trump team. Although SOL benefited in the short term, BTC's gains ultimately exceeded other altcoins. The news of "Trump WLFI buying 14.4k ETH" caused a short-term surge in ETH against BTC, but it quickly subsided.

BTC ATM Implied Volatility:

• In the middle of last week, the volatility pricing for the inauguration event started to rise. Initially, the daily volatility was only priced around 80-82 points (equivalent to a 3.2% price fluctuation), but it was gradually pushed higher, stabilizing at a volatility of 90 points over the weekend. However, just before the Monday settlement, the volatility spiked 5%, pushing the inauguration day volatility up to 110 points (equivalent to a 4.5% price fluctuation). Considering the actual price swings in the short term, it is difficult to argue too much against this pricing.
• In the longer-dated term structure, the volatility swings are still quite high, especially for the February and March expiries, where it seems there is significant flow on both sides, causing the curve to fluctuate by around 2 points in the short term. Overall, the implied volatility for these expiries is around 60 points, which appears quite high compared to the actual volatility of around 45 in the 72 hours before the event. But the market may be pricing in a term premium due to the uncertainty around the new administration's crypto plans.

BTC Skew/Kurtosis

• Overall, the skew has been rising this week as the upward demand gradually strengthened, especially as the price held above 90k USD and reclaimed 100k USD. The most notable upside demand is in the Gamma term structure containing the inauguration expiry, considering the potential tail risk from strategic accumulation policies. However, in the longer-dated term structure, the skew price action is more muted, as the market has not been aggressively rolling or adding more upside positions, suggesting it has already heavily deployed positions from the end of December and expects to continue rolling after a break above 120k USD.
• Apart from the inauguration demand in the Gamma term, the kurtosis has seen little fluctuation. The new upside demand is mainly through call spreads or call butterflies, providing wing-side buying pressure to the market. But considering our highly volatile actual volatility and the local range definition between 90-110k USD, we believe a strategy of being short in the range and long outside the range is relatively favorable.

Wishing everyone good trading in the coming week!