Key metrics: (21Apr 4pm HK -> 28Apr 4pm HK)

  • BTC/USD +8.2% ($87,500-> $94,700) , ETH/USD +13.2% ($1,590 -> $1,800)

  • Last week we saw a fairly clean and quick move through key resistance at $89–91k (coinciding with the 100d MA), faster that we initially expected (and the market seemingly). For now we expect the market to take a breather in the comfortable trading range of $92–99k, where we anticipate range-bound price action, especially with the European May Day holiday coming up and local holidays in the Asia region

  • At some point in the coming weeks, we do expect the market will want to test key resistance at $100k above here, but we’d expect reasonable offers stacked ahead of that. A break below $89k could see us retreat into the $82–89k range for a little while, though we expects dips to the now support zone of $91–89k to be bought. We remain structurally bullish over the medium term and think that the next few quarters will see a move to new highs, targeting $115–125k, with the path now looking a little clearer having taken out some key resistance levels cleanly

Market Themes

  • Positive week for risk assets as Trump/Bessent began back-pedalling on the China tariff situation, suggesting they acknowledge that they have overplayed their hand (China refused to be bullied into a ‘bad deal’), and Trump also denied reports of plans to imminently remove Powell from his position as Fed chair. While the catalyst for this shift of tone is hard to pinpoint, it seems no coincidence that it came after Trump’s approval ratings fell to their lowest yet in his term, which lends further credibility to the argument that Trump remains beholden to his voter base and ultimately doesn’t want to drive the US economy into a recession, particularly ahead of mid-terms next year. Longer-dated treasury yields retraced quickly from the highs while equities re-gained footing with SPX back to 5,500 — for context only 10% off the ATH despite all the fanfare. VIX also retraced back sub 25 after holding surprisingly long above the 30 level

  • As for crypto, BTC continued to show some de-correlation from SPX price action, though was ultimately buoyed by the tailwind for risk assets, briefly testing through $95k at the end of last week. Altcoins finally joined the rally, exhibiting a stronger correlation to risk assets, with ETH briefly testing up to $1,800, though still lacking some real momentum higher. Overall it feels we have reached a zone ahead of $100k where there is plentiful supply of BTC ahead, from those who missed selling last time round and also those who re-initiated longs between $75–82k, and as such without a fresh catalyst we can expect some consolidation in this range

BTC$ ATM implied vols

  • Implied vols trended lower last week despite the break higher in spot above $90k, as overlay selling of both calls and puts accelerated, with the downside seemingly established now, especially with risk assets recovering and BTC beginning to break its correlation from SPX. On the other hand the market seems to be expecting a wall of offers in cash ahead of $100k and therefore is willing to enter short calls against core cash longs at these elevated prices in spot. The other factor is that realised volatility has remained pretty subdued despite the magnitude of the move in range terms on the week — spot up almost 9% but in a very orderly fashion, with 1w realised clocking in the mid-high 30s on a high frequency basis

  • The term structure remains very steep with the market still reluctant to price in a more medium term reversion to a lower vol regime. If the ‘digital gold’ thesis does play out for BTC and its correlation does break with SPX, then this should actually be pretty bearish for volatility with lower realised vol on pullbacks encouraging more inflows on dips. With some expiries like June offering static roll-down of 3–4 vols in a month’s time, we continue to think longer dated vols should remain under pressure in the absence of any changes to the current environment

BTC$ Skew/Convexity

  • Skew prices in shorter-dated expiries moved for calls on each break higher in spot, but ultimately these skew moves were short-lived given realised volatility remained subdued on the moves higher in spot and this put pressure on implied vol levels even at higher spot prices. Further out the curves skew prices continued to normalise to levels more consistent with the past 12 months, as the market becomes more confident that BTC will not exhibit the same volatile down-moves as we saw in Q1 even if we see local down-turns in SPX/global equity prices

  • Convexity broadly moved sideways over the course of the week, though at this vicinity of spot ($92–99k), local strikes are likely to struggle to perform given muted realised volatility locally, but strikes outside the $88k/$102k might exhibit a sharp pick-up in realised volatility given the technical/psychological levels involved

Good luck for the week ahead!