Key indicators: (January 27, 4 PM - February 3, 4 PM Hong Kong time)

  • BTC against USD fell 3.8% ($98,800 to $95,100), ETH against USD fell 16.0% ($3,070 to $2,580)

BTC against USD Spot Technical Indicators Overview:

  • BTC against USD successfully rebounded from our marked key support level of $98,000 early last week, attempting several times to break above $106,000 in the following week but ultimately failing to gain enough momentum to form a new upward trend. By the weekend, due to Trump's tariff news and the market holding weak longs above $102,000, a strong liquidation was triggered, causing the price to drop below $98,000, then further extending downwards to briefly hit $91,000.

  • Judging the short-term situation from here is quite tricky. If the price drops below $90,000, it will invalidate the previous wave 4 rally (as illustrated) and raise questions about our long-term trajectory timeline for spot prices. A larger support level will be between $89,000–$86,000, and if breached, it could expose us to support levels of $75,000 or even lower.

Market Themes:

  • For most of last week, the market seemed to have absorbed the impact of DeepSeek's release of the R1 model. Although there were necessary adjustments in stocks like NVDA, overall, US tech/AI stocks gradually reclaimed lost ground this week, partly due to a slightly dovish statement by Powell at the FOMC meeting on Wednesday. However, the market began to fluctuate again over the weekend as Trump fulfilled his promise to increase tariffs on Mexico, Canada, and China, breaking the hopes of some that the recent easing rhetoric might lead to a pause in tariff hikes.

  • From now on, the key narrative in the market may be how to respond to this global trade war. There is still considerable divergence in the market, with some players believing that given the market's 'expectation' of increased tariffs, the reaction will only be temporary. However, others emphasize that the Trump administration is seriously considering withdrawing from global affairs and may retaliate with higher tariffs. Due to such divergence, it seems we are about to enter a period of localized turbulence until the market finds balance again and reasonably prices in this risk.

  • As cryptocurrencies were the only tradable assets during the weekend tariff news release, the Bitcoin market faced immense pressure, dropping to $96,000 before the traditional financial markets opened on Monday. With the heavy pressure after the opening of traditional finance, the cryptocurrency market triggered another round of liquidation, with Bitcoin plummeting to $91,000. Meanwhile, Ethereum once again demonstrated its characteristic of being a 'small coin,' plunging nearly 20% after breaking through the key $3,000 support level, dipping as low as $2,500.

BTC Implied Volatility

  • Despite a series of fluctuations surrounding US stocks (due to the revaluation of AI stocks after DeepSeek's release) and the Fed's statements mid-week, Bitcoin's actual volatility this week remained low, fluctuating around 40–45. In contrast, implied volatility soared to the 50s early in the week. Part of the reason may be that from Wednesday to Friday was the Chinese New Year (resulting in reduced volatility in the Asian time zone), with the price maintaining a comfortable range of $98,000-$106,000 for most of the week, naturally lowering actual volatility. However, the weekend's tariff news triggered intense price breaks and initiated another round of liquidations, pushing both actual and implied volatility higher. The implied volatility for the February 7 expiration briefly rose from a low of 42 to 71 over the weekend, then fell back to around 65.

  • On the long end of the curve, implied volatility continues to decline overall. With spot prices lacking momentum to push above $105,000, bets on price direction have been withdrawn, and we have seen significant liquidations in the market above the March expiration date. At the same time, since the Trump administration's working group may promote a plan for cryptocurrency savings no earlier than the second half of this year, the tail risk of explosive price growth in the short term has been eliminated. Nevertheless, these longer-term implied volatilities were still pulled up by the rise in actual volatility on Monday, preparing for localized price turbulence in the macro context following the trade war.

BTC Kurtosis/Skewness

  • Due to spot prices being threatened and breaking through the local support level of $98,000–$100,000, triggering liquidations and causing high actual volatility, the skewness in the short term has sharply tilted downwards over the weekend. However, after the short-term positions were liquidated, with spot prices rebounding to $94,000, the skewness quickly recovered from its low point. On the longer-term end of the term structure, despite implied volatility indeed rising when prices fell, the skewness remained relatively stable.

  • Kurtosis prices are relatively stable on the short-term end. In the short term, however, due to demand on the downside wing after price breakouts, there was a sharp rise in kurtosis for a short period.

Wishing everyone good trading luck this week/month!