Key Indicators (from July 21st at 4 PM HKT to July 28th at 4 PM HKT)
BTC/USD -0.3% ($119,400 → $119,000), ETH/USD +2.4% ($3,800 → $3,890)
Last week the market entered a consolidation phase, attempting to test the support level of $115,000 on Friday. After briefly breaking below, it quickly rebounded and ultimately held the level. The price has now returned to the consolidation range, but upward momentum has increased. On the surface, this pattern lays a strong foundation for returning to the historical high (ATH); if a breakout is successful, the target price may point towards the $125,000–$135,000 range.
If it breaks below $115,000, the pullback may continue to deepen, potentially dropping to around $112,000. If the stronger support level of $109,000 is breached, it could lead to a more significant price drop, and we would need to reassess the trend.
Market Themes
Overall, market sentiment remains optimistic: The earnings data from US stocks remain robust, continuing the 'Goldilocks' market trend, and economic data paves the way for the Federal Reserve's interest rate cuts in the coming months, with no significant signs of inflationary risks resurfacing. Although tariff issues still have some noise, the peak of uncertainty has passed, and most countries (except China) have ultimately compromised with the US/Trump's demands, making the US the biggest beneficiary.
Cryptocurrency overall remains strong in this environment, but crypto-related stocks (such as $SBET and $BMNR, among others) significantly retraced last week's exaggerated gains due to the market returning to rationality and the meme craze subsiding. However, spot prices were not significantly dragged down: ETH firmly held above $3,700; despite BTC facing pressure from a long-term holder selling $9 billion through Galaxy (executed last Friday), it still showed strong support around $115,000, rebounding to above $119,000 after the weekend. Current bull market participation is slightly subdued due to the summer off-season; if the macro environment stabilizes, it may attract more capital inflows in the coming months.
BTC USD ATM Implied Volatility
Actual volatility fell to the mid-20% range early last week (as spot prices held around $118,000–$119,000), but just before the weekend, MSTR's announcement of a $2.5 billion stock offering (up from the planned $500 million) briefly spiked prices to $120,000, followed by a $9 billion sell-off on Friday that drove the spot price down to $115,000. Despite recovering to $118,000 and testing $120,000 on Monday morning, short-term implied volatility has still decreased, as the market is clearly in the bullish Gamma excess range of $115,000–$121,000.
The term structure is gradually steepening, but it remains relatively flat compared to historical levels, making it difficult for the market to price long-term term premiums. However, liquidity for long-term option sellers is drying up, combined with localized price fluctuations (such as dropping to $114,600 on Friday), leading us to continuously see the market attempting to capture directional opportunities through 9–12 month expiration options — considering that the underlying volatility is low and leverage is higher.
BTC USD Skew/Kurtosis
Skew: There has been a surge in demand for bearish short-term options (due to Friday's sell-off raising concerns about a deep pullback to $112,000–$110,000), and the hedging buy orders for the 1–2 period at the $110,000 strike price further boosted the bearish skew. Although actual volatility has not significantly increased, and volatility is similarly fierce during price rebounds, it is expected that skew pricing will struggle to maintain current levels unless $115,000 is confirmed as broken. Long-term demand remains concentrated on call options, supporting the skew leaning upward.
Kurtosis: The short-term increase in bearish hedge demand at the wings has pushed it higher. The butterfly curve is severely inverted, and combined with the historical high volatility of BTC assets, the strategy of 'going long on long-term butterfly options + going short on short-term butterfly options' offers better cost-effectiveness in this environment.
Wishing you successful trading this week!
