Key Indicators: (May 5th 4 PM -> May 12th 4 PM Hong Kong Time)
BTC against USD rose 10.7% ($94,700 -> $104,800), ETH against USD rose 39.2% ($1,825 -> $2,540)
The market explored the resistance level of $99-100 thousand and successfully broke through, bringing us to $101-110 thousand, and surprisingly without much resistance. Overall, although the weekly gain was significant (10.7%), the actual volatility was low, as sellers from profit-taking and hedging long Gamma positions were above the price, making the price movement very orderly during the rise.
The market has risen nearly 40% from the low of $74-75 thousand within a month, which is quite remarkable. It also confirms that we are in the final stage of the trend since last September. Currently, we expect the market to consolidate between $92-106 thousand in the next few weeks, but with the possibility of further partial upward extension. We continue to be bullish on BTC and expect to reach $115-125 thousand in the next few months or quarters, which is our current long-term high point. From a technical perspective, considering the rise is more aggressive than expected, we have the opportunity to rise to $130-135 thousand.
Market Themes
Other market activities this week were very quiet. The market ignored the Federal Reserve's comments about "not being in a hurry to cut rates" and still expects 2-3 rate cuts in the next year. The main topic of discussion remains Trump's trade war, especially the announcement on Monday to cancel tariff rates on China (reduced by 115%), ending nearly a week of negotiations. Meanwhile, other trade agreements are gradually being finalized, including the US-UK agreement announced last weekend. The market has completely offset the stock sell-off caused by tariffs and even eliminated some pricing adjustments due to concerns about the US economic slowdown, with the S&P index almost back to its beginning-of-year level.
Returning to cryptocurrencies, the bullish sentiment in US stocks plus Bitcoin completely breaking through $100 thousand is enough to stimulate the altcoin market back to life. Especially Ethereum showed clear altcoin characteristics, surging nearly 40% throughout the week and clearing many structural short positions. There were not many ETF trades on Ethereum, in contrast to the steady inflows on Bitcoin. Therefore, although this altcoin rally caused much panic, the overall environment dominated by Bitcoin has not fundamentally changed, and the changes in altcoins are more like a short-term wash.
BTC Implied Volatility
Last week, despite the price completely breaking through $100 thousand and approaching $106 thousand, implied volatility was difficult to rise. Overall, the actual volatility was quite smooth, despite the large total volatility, with the high-frequency actual volatility being only around 37 throughout the week. The buying demand from speculators was minimal, with tactical bullish spreads being the only volatility buyers. Meanwhile, there was continuous selling pressure on both sides, with the market reducing delta exposure through covered options at price highs, and players also accumulating earnings by selling put options.
Currently, unless there is a significant breakthrough or notable catalyst, we expect the price to further consolidate and further lower the implied volatility. The market currently appears to have accumulated many long positions due to continuous selling pressure, and the term structure is already very steep, with June and July implied volatilities rolling down at about 1-1.5 points per week, meaning that even holding long positions in this environment is very challenging (though it must be acknowledged that the absolute level of implied volatility is still low).
BTC Skew/Kurtosis
The skew price was extremely biased upward when the price first broke through $100 thousand this week, as the market was concerned about an explosive breakthrough of the key resistance level of $99-100 thousand. However, it was later discovered that there was a large amount of spot and perpetual selling due to profit-taking and long Gamma on the market, and the price movement was actually very orderly. This encouraged more players to sell call options, pulling the skew back from being biased upward. Ultimately, as the price pulled back, the skew ended the week basically stable.
Kurtosis continued to be suppressed due to selling pressure on both sides. Directional trading was mainly done through bullish spreads, with net selling of kurtosis in the market. Considering that $94-106 thousand looks like a low volatility range (returning to February and two weeks ago), we again believe it is worth holding out-of-range strike prices, while local prices should continue to decline due to price stabilization. Therefore, from a relative price perspective, we believe the kurtosis price is still too low.
Good luck this week!
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