Key Indicators: (April 21 4 PM -> April 28 4 PM Hong Kong Time)
BTC against USD rose 8.2% (87,500 -> 94,700 USD), ETH against USD rose 13.2% (1,590 -> 1,800 USD)
Last week, we saw the price cleanly and quickly break through the key resistance level of 89-91 thousand USD (in line with the 100-day moving average), faster than our initial expectation (and seemingly beyond market expectations). Currently, we anticipate a brief pause, with consolidation in the comfortable range of 92-99 thousand USD, especially considering the upcoming May Day Labor Day and local Asian holidays.
In the next few weeks, we expect the market to start attempting to break through the 100 thousand USD resistance level, but there are indeed many sell orders to penetrate before that. If it breaks below 89 thousand USD, the price might retrace to 82-89 thousand USD, but we expect significant buying support in the 91-89 thousand USD range. Medium-term, we remain bullish, expecting to reach new highs in the next few quarters, with target prices between 115-125 thousand USD, and the current price trend looks clearer after breaking key resistance levels.
Market Themes
Risk assets performed well this week. Trump and Bezant converged on US-China tariff issues, implying acknowledgment of their overly harsh stance (China refused to comply with the "sky-high treaty"), and Trump also denied reports of removing Powell as Federal Reserve Chairman. Although the reason for Trump's attitude change is hard to determine, the timing coincides with his support rate dropping to the lowest point since taking office, which doesn't seem coincidental. It confirms that Trump is still influenced by his voter base and doesn't want to push the US economy into recession, especially before the midterm elections. Long-term bond yields quickly fell from their peaks, and the stock market regained its footing, with the S&P index returning to 5,500 - even after a tough battle, falling only 10% from historical highs. The VIX panic index finally dropped below 25 after unexpectedly staying above 30 for a long time.
For cryptocurrencies, Bitcoin's correlation with the S&P index continues to weaken, but still benefited from risk assets, briefly breaking through 95 thousand USD over the weekend. Other altcoins finally joined the rise, showing a stronger correlation with risk assets. Ethereum briefly explored 1,800 USD but still lacks momentum for further increases. Overall, Bitcoin still faces considerable obstacles before reaching 100 thousand USD, such as positions that didn't sell during the previous downturn and positions hoping to re-enter at lower points between 75-82 thousand USD. Therefore, without new catalysts, we expect the price to remain stable in this range.
BTC ATM Implied Volatility
Despite the price breaking 90 thousand USD last week, implied volatility showed a downward trend. This is because the market is accelerating the sale of both call and put options, especially as risk asset sentiment recovers and Bitcoin's correlation with the S&P begins to weaken. On the other hand, the market expects to see many sell orders before 100 thousand USD, so it's willing to sell call options at higher prices to hedge spot positions. Meanwhile, actual volatility remains quite low, with price movements very orderly despite significant variations, with 1-week high-frequency actual volatility basically around the 30s.
The term structure remains very steep. The market is reluctant to price medium-term volatility lower. If the "digital gold" theory of Bitcoin truly holds and breaks its correlation with the S&P, volatility expectations should lean towards selling, as any pullback would trigger more buying. Currently, pricing for volatility rolling down 3-4 points within a month of the June expiration date still seems high. We believe long-term volatility should continue to be compressed if market conditions don't change.
BTC Skew/Kurtosis
Short-term expiration skew will lean bullish with each price increase but quickly return to normal. Mainly because actual volatility remains low when prices rise. Long-term skew further returned to the regular level of the past year, as the market is more confident that Bitcoin won't experience volatility spikes during downturns like in the first quarter, even if the S&P index or global stock prices fall.
Kurtosis remained relatively stable this week. At the current price range of 92-99 thousand USD, local price increases are difficult due to low actual volatility, but outside the 88 thousand USD/102 thousand USD range, there's a possibility of actual volatility sharply increasing due to technical and psychological levels.
Wishing everyone a successful trading week!
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