Key Indicators: (May 12, 4 PM - May 19, 4 PM Hong Kong Time)

  • BTC down 1.5% ($104,800 -> $103,200), ETH down 5.3% ($2,540 -> $2,405)

BTC to USD Spot Technical Indicators:

  • Since the price has entered a higher range ($101,000 to $110,000), market activity, whether high-frequency or daily-frequency, has shown very low volatility. Balanced buying and selling transactions have kept the price well controlled within this range. Considering the market's consistent volatility cycles, we have found that the typical volatility cycle over the past year and a half is around 14 to 20 days, rarely exceeding 20 days, suggesting that market patience may be exhausted in the coming week. We will either attempt to break the historical high again or fall into the $90,000 to $95,000 range for a long-term consolidation.

  • Although we still acknowledge that there may be corrections during consolidation, it is worth noting that the recent support for price movements has been very strong, and we are more confident that the rally to $125,000 is approaching, likely faster than we initially expected. The current price movement is not yet clear, but we expect significant market follow-up after breaking $110,000.

Market Theme:

  • Last week, overall market risk sentiment improved, with US-China tariffs reverting to pre-increase levels (was it all just a nightmare?). US macro data was also favorable for the market, including a slightly slowing CPI index. US stocks have fully erased the sell-off triggered by the trade war and are starting to eliminate the repricing caused by 'US economic slowdown'. Moody's downgraded US Treasury ratings from AAA to AA1, which ultimately did not cause a significant stir, as the 'knee-jerk reaction' from US stocks quickly faded. However, the dollar and long-term US Treasuries did decrease in pricing accordingly. From a macro fundamental perspective, any further rise in US stocks will be very painful, as the market was forced to adjust position weights or close positions at relatively cautious/pessimistic levels over the past week.

  • The Bitcoin market has remained well within the range under Saylor's continued aggressive 'buy the dip' strategy (buying 7,390 BTC at an average price of $103,500 last week). There are still many sell orders around $105,000 to $107,000. The price briefly spiked to this level on Monday but quickly retreated to $102,000, then returned to the median of $101,000 to $107,000, a range we have been stuck in for several weeks. Ethereum briefly touched $3,000 before falling back to $2,800, and then stabilized around $2,500.

BTC ATM Implied Volatility

  • Another week of low volatility, with volatility only slightly above 30 before the price rapidly fluctuated on Monday, leading to a continued decline in implied volatility last week. The rise on Monday morning quickly disappeared. Overall, the market still seems to hold bullish volatility, as there is significant selling pressure on both sides of price movements. As we continue to be suppressed within the $101,000 to $107,000 range, options demand will also remain subdued.

  • The volatility term structure remains very steep, with June and July expirations declining at a rate of 1-1.5 points (not considering changes in the term structure). This means that even holding long positions in the distant future is very challenging (despite the implied volatility being low in absolute terms). Market makers appear to hold long positions in June or July and are continuously selling the front end to support losses at the back end. This is also why the front end is pressed so low (almost as low as actual volatility).

BTC Skew/Kurtosis

  • After a relatively stable week, the skew sharply tilted upwards on Monday morning as the price broke through $106,000 but was then very volatile, pulling back to $102,000, which led to a correction in skew. However, as there was significant buying demand for prices around $100,000 to $101,000, the market grew increasingly concerned that prices would fluctuate sharply upwards beyond historical highs, causing the skew to tilt upwards again.

  • The kurtosis remained sideways after bouncing back from a low point, with ongoing selling pressure still suppressing the kurtosis. However, the market also recognizes the potential for actual volatility to spike outside the $101,000 to $107,000 range, leading to a decrease in willingness to sell outside this range.

Wishing everyone good luck this week!