Key Indicators (February 17, 4pm -> February 24, 4pm Hong Kong time)
BTC against USD fell 0.3% (96,150 USD -> 95,900 USD), ETH against USD rose 1.3% (2,690 USD -> 2,725 USD)
Overview of BTC against USD Spot Technical Indicators
After a week of low volatility, the spot market successfully digested the sell orders at the top of the price trend channel and began to test the 99-100k USD resistance level on Friday. However, the news of the Bybit hack then broke out, causing many to withdraw their margin, and the large selling pressure triggered a round of liquidation. The market then withstood the attack on the 95k USD support level and gradually retreated back to the top of the previous price trend channel.
From here, the next few trading days will determine whether the market is willing to return to the original trend channel and form a new stable pattern; or successfully break out of the trend channel, in which case we are likely to see a substantial increase in the coin price and witness another attack on 100k USD. On the downside, if the 95k USD support level is breached, the market will most likely first test the 93k USD level, followed by the long-standing 90-91k USD resistance level below. If the 90-91k USD resistance level is also breached, we may see a longer downward correction in the coin price.
Market Themes
The macro market has gone through another calm week. The market remained quite stable until Friday, when weak US economic growth data and persistent inflationary expectations triggered "stagflation" fears again, causing US stocks to fall and bond yields to decline due to the traditional "safe haven" mentality. However, the overall macro backdrop remains stable, and the short-term position adjustments seem somewhat exaggerated in the current low-volatility environment.
The cryptocurrency market is still seeking a new narrative, with the small-cap market performing quite weakly. The news of MSTR's fundraising to purchase more BTC in the middle of the week boosted the market, and BTC briefly approached the key 100k USD level on Friday. However, the news of the Bybit hack, which saw 1.5 billion USD worth of ETH stolen, disrupted the market, triggering a wave of long liquidations on Bybit. This week ended with ETH down 6% and BTC returning to 95k USD.
BTC Implied Volatility
This week, the implied volatility trend has been low, especially for the February to March expiration dates. The consumption of THETA and the continuous roll-down of implied volatility on the steep term structure have caused the long volatility positions to capitulate. Actual volatility has recently been locked in the 30s, pushing the daily implied volatility down to 35-36. This is the lowest level since the pre-election period in October last year. With BTC still holding in the 94-99k USD range, we do not expect local actual volatility to rise significantly. This should continue to put pressure on short-term implied volatility.
In terms of the ATM term structure, the market seems to be continuing to harvest the premium on the more distant (low Gamma impact) expiry dates. Although we believe there is a premium in the term structure, the curve will most likely continue to steepen before the long positions capitulate on the June and beyond expiry dates.
BTC Skew/Kurtosis
After the news of the Bybit hack, the short-term skew plummeted dramatically. Although the news ultimately did not cause a significant price drop, we expect the skew to remain at the current level for some time. The skew on the far end of the term structure remains stably tilted upwards, as there are still tail risks of US crypto hoarding and deregulation.
Kurtosis has been quite muted on the longer-dated expiry. The short-term upside price briefly spiked after the Bybit news, but it was only a fleeting occurrence.
Wishing you all the best for this week/month!
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