Key Indicators: (November 25 4PM -> December 2 4PM Hong Kong Time)
BTC against USD decreased by 2.4% (98,200 -> 95,900 USD), ETH against USD increased by 6.7% (3,410 -> 3,640 USD)
BTC against USD year-end (December) ATM volatility decreased by 4.2 points (60.0 -> 55.8), year-end 25 d skewness remained unchanged (4.9 -> 4.9)
Spot Technical Indicators Overview:
The price seems to have reached a local top. Although some well-known companies are still aggressively buying, the upward trend has not been able to continue. This is largely in line with our view that the market has already gone through the major upward phase and is stabilizing here before the next wave of volatility.
Our base case is that any price correction will be relatively mild. Given the strong support below, we may experience lower realized volatility in the coming weeks. But if the price breaks above 100,000 or 90,000 USD, there will be more significant volatility in the market, so caution is needed outside of this range. If the price breaks above 100,000 USD, it will give us an opportunity to reach 110,000-115,000 USD earlier than our expected timeline of January-February next year, conversely if the price drops below 90,000 USD, 85,000 USD would be a reasonable support, and further down the price may fluctuate violently below 76,000 USD.
Market Themes:
Last week was relatively calm due to Thanksgiving. The S&P 500 index climbed to 6000, while US Treasury yields continued to slowly retreat from their highs as Janet Yellen was confirmed as the next Treasury Secretary.
Bitcoin failed to break through the $100,000 level again, triggering a pullback to as low as $90,800, but found strong support at that level. It has gradually rebounded back to the mid-range of $95,000-96,000. Overall, with MSTR's large purchases absorbed, the market is more balanced at current levels.
However, we continue to see impressive progress in other cryptocurrencies. The Ethereum ETF finally saw some decent inflows, causing spot Ethereum against the US dollar (ETHUSD) to briefly break above $3,700. Ripple (XRP) also surged 50% this week.
ATM Implied Volatility:
After the rather violent pullback to $90,800 and the subsequent upward correction to $97,000, the price has shown signs of stabilizing for the first time, exerting downward pressure on implied volatility and realized volatility. This opportunity, many year-end positions have likely been cleared, and the liquidation last week provided more selling pressure to the market overall.
As we approach the year-end and holiday season, we expect implied volatility to face further downward pressure and a naturally steeper term structure. However, we find the market pricing of volatility between now and January to be quite extreme. If the price fluctuates within a certain range during this period, this pricing will be difficult to maintain.
Skewness/Kurtosis:
Skewness briefly corrected downward, consistent with the spot price pullback from $99,800 to $90,800, but it was only a fleeting occurrence. As the price showed strong support, the skewness price recovered most of its decline over the remainder of the week.
Overall, kurtosis has been gradually decreasing this week, consistent with the lower volatility levels, and also impacted by the persistent selling pressure on the call-put volatility spread. The market seems to expect the price to rise at a slower pace from here.
Wishing you all a great week ahead!
