Key Indicators: (March 3 4pm -> March 10 4pm Hong Kong time)
BTC against USD fell 10.7% (92,200 USD -> 82,300 USD), ETH against USD fell 14.8% (2,430 USD -> 2,070 USD)
BTC against USD Spot Technical Indicators Overview
Due to the impact of a series of news and crypto-related events last week, market volatility has remained high. Ultimately, the coin price was unable to stabilize and continued to fluctuate widely, with the downside support at 79-73 thousand USD and the upside resistance at 89-93 thousand USD.
We had hoped that last week's bottom exploration and rapid rebound would indicate that the prolonged correction period had ended, but the coin price performance was not as expected. The resistance levels above the initial drop include 95-96 thousand USD, then 100-102 thousand USD, and finally 110 thousand USD. If the price falls below 73 thousand USD, it may retrace to 65-67.5 thousand USD, and the subsequent price trend will be more complex than currently anticipated. We still maintain a medium-term bullish view, but the timeline may be further extended due to the lack of strong upward momentum.
Market Themes
Due to the re-ignition of global trade war fears by US tariffs, the VIX index has risen from 20 to 26 points. Meanwhile, European and German defense spending has triggered a sell-off of German bonds, which has spread to Japanese, British and US bonds, further complicating the entire risk market. The Trump administration appears eager to lower long-term interest rates and refinancing costs and ease economic conditions, although achieving this goal may lead to further sell-offs and capital outflows from US risk assets. The non-farm data is slightly weak, and this trend may continue under the pressure of DOGE (government efficiency department).
Returning to cryptocurrencies, the price rebound triggered by Trump's tweet was just a flash in the pan. Pressure from the US stock market triggered a sharp reversal of the price from 95 thousand USD a week ago to a low of 81-82 thousand USD. Subsequently, with the US stock market recovering from the bottom and the optimistic sentiment from the crypto summit on Friday, the price found support at this level. On Thursday night, Trump signed an executive order to use the BTC he holds for crypto reserves. Although this news suggests no further buying, it is at least a step in the right direction for BTC (no mention of other tokens). After the market sentiment recovered on Friday evening, the price briefly touched the 90-91 thousand USD resistance level, but continued to probe lower in the absence of any new news from the summit. During the low liquidity period on Sunday evening, BTC was sold off below 80 thousand USD, ETH fell below 2 thousand USD, and SOL broke below 125 USD.
BTC Implied Volatility
Although implied volatility fluctuated quite violently during the week, it was essentially unchanged week-over-week. Implied volatility was squeezed higher ahead of the crypto summit, with overnight volatility pricing briefly reaching 5%. The very high actual volatility also supported the rise in implied volatility before the summit. However, after the summit without any new news and a very restrained price performance, implied volatility was oversold, with the March 14 expiry implied volatility briefly selling off to 47, before rebounding sharply after the price was sold off on Sunday.
Actual volatility remains in the high 50s to 60 range, at the highest level in recent times, as the market is still seeking balance in the new range. Although we expect continued local volatility in the next few days, considering the cleaner positioning in the market now, we believe actual volatility will return to the mid-40s level later this week.
BTC Skew/Kurtosis
The short-dated skew is biased to the downside. This is because the price decline from the highs has been more violent than the upside (except for the Trump tweet). Further out the curve, the skew turns positive from April/May, as the market is structurally unwilling to deploy positions on the downside.
Although kurtosis ended the week essentially unchanged, the intraweek changes were quite dramatic and highly correlated with price changes. However, as the price has remained in a local range and players have largely configured directional positions using call or put spread options, we can see the weight of the wings being pulled down, causing a temporary dip in kurtosis, but we recommend holding the wings for protection.
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