Key Indicators: (May 12th 4 PM -> May 19th 4 PM Hong Kong Time)
BTC against USD dropped 1.5% (104.8k USD -> 103.2k USD), ETH against USD dropped 5.3% (2.54k USD -> 2.405k USD)
BTC against USD Spot Technical Indicators
Since the price broke into a higher price range (101-110k USD), market activity has shown low volatility in both high and daily frequencies. Balanced buy and sell transactions have well controlled the price within the range. Considering the market's consistent volatility cycle, we found that the volatility cycle in the past year and a half generally falls within 14-20 days, rarely exceeding 20 days, suggesting market patience may be exhausted in the next week. We will either attempt to break through the historical high again or fall to 90-95k USD for a long-term consolidation.
Although we still acknowledge potential pullbacks during consolidation, it's worth noting that the recent price trend support has been very strong. We are more confident that the price increase to 125k USD will arrive, and faster than initially expected. The current price trend is not yet clear, but we anticipate significant market follow-up after breaking through 110k USD.
Market Themes
Last week, overall market risk sentiment warmed up, with US-China tariffs rolling back to their starting point (was it all just a nightmare?). US macro data was also market-friendly, including a slightly slowing CPI index. US stocks have completely offset the sell-off caused by the trade war and started to eliminate the pricing reassessment caused by "US economic slowdown". Moody's downgrade of US debt rating from AAA to AA1 ultimately did not cause major waves, as the US stock market's "knee-jerk reaction" quickly subsided, but the US dollar and long-term US bonds did adjust their pricing accordingly. From a macro fundamental perspective, any further rise in US stocks will be painful, and the market was forced to lighten position weights or close positions at a relatively cautious/pessimistic level in the past week.
The Bitcoin market remained stable within its range under Saylor's continued aggressive "buying the dip" (purchasing 7,390 BTC last week at an average price of 103.5k USD). There are still many sell orders at 105-107k USD, with the price briefly exploring this level on Monday before quickly retreating to 102k USD, then returning to the 101-107k USD mid-range that we have been trapped in for weeks. Ethereum briefly glimpsed 3k USD, touched 2.8k USD, then fell back and stabilized around 2,500 USD.
BTC ATM Implied Volatility
Another week of low volatility, with volatility around just over 30 before Monday's rapid price movement, causing implied volatility to continue declining last week, with Monday morning's rise quickly disappearing. Overall, the market still seems to hold a bullish volatility stance, as there is significant selling pressure on both sides of the price movement. As we continue to be suppressed in the 101-107k USD range, options demand will also remain silent.
The volatility term structure remains very steep, with June and July expiration dates declining at a 1-1.5 point rate (without considering term structure changes). This means that even holding a long position on the far end is very challenging (although the absolute level of implied volatility is low). Market makers seem to hold long positions in June or July and continuously sell the front end to support the back end's losses. This is why the front end is so suppressed (almost as low as the actual volatility).
BTC Skew/Kurtosis
After a relatively stable week, skew sharply tilted upward on Monday morning when the price broke 106k USD, but was quickly and volatilely pulled back to 102k USD, causing skew to pullback. However, with significant buying demand at 100-101k USD, the market is increasingly concerned that prices might dramatically rise above historical highs, thus pushing skew upward again.
Kurtosis remained sideways after bouncing back from its low point, with continued selling pressure still suppressing it. However, the market also recognizes the possibility of actual volatility surging outside the 101-107k USD range, thus reducing the willingness to sell outside this interval.
Good luck to everyone this week!
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