Key Indicators: (May 19, 4 PM - May 26, 4 PM Hong Kong time)

  • BTC rose 6.8% against USD (from $103,200 to $110,200), ETH rose 7.3% against USD (from $2,405 to $2,580)

  • Congratulations to Bitcoin for reaching a new high! After breaking the previous peak, the price initially surged to $111,900, then fell below the resistance level of $108,250-$109,750 due to Trump's tariff news and significant selling pressure, but has since fluctuated within a narrow range. Given the current situation, we tend to believe that the market will gradually rise in a relatively stable manner (with some possible fluctuations), which could quickly push the price towards the target of $125,000. Active bilateral trading may cause prices to continue to consolidate for a few days, especially if the upcoming Bitcoin conference does not produce a significant impact, but we believe the next price surge will come soon. If the price corrects and falls below the key resistance level of $101,000-$101,000, it may further decline to $93,000-$94,000.

Market Themes

  • Market risk sentiment remains, but momentum is beginning to weaken. Due to Trump's threat to impose a 50% tariff on the EU starting in early June, US stocks fell and US bonds rose, but he quickly withdrew this threat and prepared to reach an agreement on July 9. The uncertainty of US policies continues to impact the dollar, with gold prices steadily rising to nearly $3,400, while G10 currencies against the dollar are also gradually rising.

  • Despite weak US stocks, Bitcoin profited from the decline against the dollar this week, briefly rising to a new high of $112,000 before encountering some resistance. Trump's announcement of a 50% tariff on the EU led to a sell-off of short-term long positions, pulling the spot price back to $107,000. However, the price found good support here and returned to $109,000 ahead of the cryptocurrency conference. Ethereum has remained stable in the range of $2,400-$2,700, and the market is clearly holding fewer positions and is more transparent. Stablecoins continue to develop positively, and ETF inflows remain strong, but further upside from here may require new catalysts.

BTC ATM Implied Volatility

  • Last week, as market bullish momentum intensified, actual volatility began to recover from low levels, and short-term high-leverage positions emerged, but were liquidated following Trump's tariff news against the EU. Despite local high-frequency volatility rising to levels in the forties to just over fifty, the price ultimately fluctuated within the range of $105,000-$112,000, with daily actual volatility remaining very low, indicating that the market is still in a mean-reversion state, and the long gamma positions held by the market quickly pulled back during price fluctuations. Therefore, in the absence of directional trading, although actual volatility has risen, implied volatility remains stable.

  • The term structure remains steep, with the market looking to sell front-end expirations to support long positions from June to September. The expirations during the week unexpectedly rose, as the market priced in a premium for the upcoming Bitcoin conference in Las Vegas, with the May 28 expiration including speakers from the first day, and the market pricing in a 2% price fluctuation on that day. This pricing is relatively low compared to other Bitcoin conferences, but it must be acknowledged that the importance of this conference is somewhat unclear.

BTC Skew/Kurtosis

  • After a week of relatively stable price fluctuations, the skew attempted to break historical highs as prices rose, but fell along with a rapid price correction. The short-term skew even tilted downward due to Trump's tariff event against the EU on Friday, but the subsequent rise in actual and implied volatility confirmed that a downward tilt was reasonable. However, with Trump's quick change in attitude and potential positive factors from the upcoming Las Vegas conference, the front-end skew has tilted upward again.

  • The kurtosis has continued to decline over the past week due to ongoing selling on the wings. The market struggles to support long positions in the middle and wings, hence willing to sell the wings to mitigate the impact of a recession. Given that the spot price movements are very restrained in certain areas, and the possibility of actual volatility (and implied volatility) sharply rising and tilting to one side (for example, during last Friday's significant drop), we believe it is very worthwhile to hold kurtosis in this environment.

Wishing everyone good luck this week!