Key Indicators: (March 31st 4 PM -> April 14th 4 PM Hong Kong Time)
BTC against USD rose 3% ($82,000 -> $84,450), ETH against USD dropped 11.1% ($1,800 -> $1,620)
Despite market chaos, Bitcoin's price remained quite resilient over the past two weeks. Last week, the price touched $74,000 twice, which was the initial resistance level since the US election, and then broke through the medium-term downward range since January. It is now stuck in a strong support zone between $81,800-$82,300, with a strong resistance level overhead between $88,000-$90,000.
Overall, technical indicators suggest Bitcoin's price may consolidate horizontally between $82,000-$88,000 in the coming weeks, with current market positions appearing cleaner. If the Double Bottom at $74,000 continues to hold, it would mark the end of the correction period since the election and pave the way for the price to rise to $115,000-$120,000 in the next month.
Market Themes
Global markets experienced extreme volatility over the past two weeks. Trump's reciprocal tariff policy exceeded the most hawkish expectations, especially as pressure on China ultimately escalated into retaliatory measures, with tariffs exceeding 100% for both sides, effectively making trade impossible. The VIX panic index surged from 20 in early April to nearly 60, with markets struggling to digest the tariff event's impact. Trump spent a week trying to bring countries to the negotiating table but ultimately failed to change positions. Due to the fragile US debt market, Trump announced a 90-day tariff suspension for countries other than China, which eased market sentiment. The VIX index closed below 40 last week.
The impact was not limited to stock markets; markets strongly resisted US assets after the tariff policy announcement, causing the DXY dollar index to drop nearly 5% in April alone. Long-term US Treasury bonds, once considered a "safe-haven asset," also experienced selling, resembling an "emerging asset crisis". An estimated over $10 trillion in unhedged dollar assets are held globally. Therefore, while the dollar's value adjustment has slowed, the trend is inevitable as markets re-adjust asset hedging during the Trump era.
For cryptocurrencies, recent performance has been largely influenced by asset volatility. Bitcoin repeatedly explored the $74,000-$75,000 range, while Ethereum experienced significant liquidations and briefly dropped to $1,400. However, with the 90-day tariff suspension and VIX index decline improving stock market conditions, Bitcoin began to stabilize, showing a trend of differentiation from traditional markets. Ultimately, we still need a more consistent and stable macro background to support Bitcoin's rise to $88,000-$90,000, and we would need new stock market lows or a new VIX index high for the price to break below $74,000. Overall, the price is currently in a stable range before Easter.
BTC ATM Implied Volatility
Over the past two weeks, Bitcoin's implied volatility has fluctuated dramatically with stock market volatility. There seem to be few buyers of volatility below the price, except for some strategic short-term protection needs. Thus, as actual volatility surged, only short-term contracts' implied volatility increased, leading to an inverted term curve.
With the VIX index gradually stabilizing this week-end and US debt finding a balance point, it's unlikely that the cryptocurrency market will experience higher volatility in the next 90 days. We anticipate seeing significant selling on both sides as the price stabilizes within the range. If stock or interest rate markets experience further chaos, the risk of central bank intervention (including potential quantitative easing) may increase, and these tail risks could again push cryptocurrency volatility higher.
BTC Skew/Kurtosis
With each VIX rise or stock market decline, skew prices aggressively lean towards the downside of the price. Therefore, Bitcoin's price currently maintains a high correlation with the S&P index, and Bitcoin's price correlation with volatility is also identical to the S&P index. The skew's downward slope is less obvious beyond the April expiration date, so there isn't a very large structural downside hedging demand in the market. However, we do see some buyers of put options for June at $60,000-$70,000.
Kurtosis ended the week essentially unchanged, despite the significant implied volatility fluctuations and the high correlation between price and skew (skew extremely drops when price drops, and returns when price recovers). Overall, the recent price has been locally volatile while remaining relatively stable in the medium-term range of $74,000-$90,000, so the market isn't very interested in buying wings. Structurally, we still believe wing prices are too low, based on the quite volatile volatility and spot dynamics towards skew.
Good luck next week!
