Key Indicators: (December 23, 4 PM -> December 30, 4 PM Hong Kong Time)
BTC against USD decreased by 1.9% (95,300 USD -> 93,500 USD), ETH against USD increased by 3.0% (3,300 USD -> 3,400 USD)
Although the price trend was quite volatile over the past week, it ultimately remained within the range of 92,500 USD - 99,000 USD, leading to a contraction in actual volatility (at least between settlement points). We speculate that the trend will continue in the next few trading days, but there may be volatility at the end of the year. This relatively long-term price adjustment is likely to end before the end of the year, and prepare for the next round of upward movement.
The current support level is as low as 92,000 USD, and further down we expect to see strong support at the 90,000 USD level, with the next support level falling all the way to 85,000 USD. If the support of 85,000 USD is broken, we will see a more substantial decline, but we believe this scenario is highly unlikely. On the upside, if the price successfully regains the psychological level of 100,000 USD, it will open up opportunities for further upside exploration and reach our target price range of 115,000 USD - 120,000 USD (expected in the first quarter).
Market Themes
During the very quiet holiday week, the price has undergone some consolidation under the influence of the more hawkish FOMC meeting, with the US stock market taking a downward breather and the US dollar (against other fiat currencies) strengthening.
The momentum in the cryptocurrency market has started to turn downward. The market is currently undoubtedly in a long position, but there are signs of a lack of buyers. Rumors that MSTR will enter a quiet period before its January earnings report have also reduced the upward pressure on BTC prices in the coming weeks.
BTC ATM Implied Volatility
Although the price has seen some local volatility, with the price finding balance in the broad range of 92,000 - 99,000 USD, the overall level of actual volatility has been on a continuous decline. However, the implied volatility for maturities in February and beyond remains stubbornly high, as the market is still digesting the surge in demand earlier this month.
We expect the implied volatility to decline more reasonably in January. The current market pricing of implied volatility for the first quarter averages over 60 points per week, which will be difficult to sustain based on historical data. Although accompanied by a repositioning of the market at the beginning of the new year, as well as Trump's inauguration on the 20th, we expect to see an increase in volatility in January. However, the BTC asset itself has become more stable and is receiving quite good support from ETF inflows. Therefore, we believe that sustainable actual volatility will be in the range of 40 - 50 (rather than the current pricing of over 60 points for maturities in February/March and beyond).
BTC Skewness/Kurtosis
Despite the implied volatility remaining unchanged at the lower price levels, and the actual volatility on the downside also quite high, the skewness has continued to trend upward this week. The market is continuing to seek upside opportunities for 2025 and is utilizing the current lower prices to achieve this. At the same time, the large buy-in flow earlier this month has created a short position in the middle of the curve.
Accompanied by the breakdown of the correlation between price and skewness, the kurtosis has been declining unilaterally. At the same time, the demand for the downside wing in the medium to long term is still lacking (only some short-term strategic buyers on the downside to prevent the price from falling below 90,000 USD).
This concludes the 2024 report! Thank you all for reading, and Happy New Year!
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