Key metrics: (3Feb 4pm HK -> 10Feb 4pm HK):
BTC/USD +2.5% ($95,100 -> $97,500) , ETH/USD +2.3% ($2,580-> $2,640)
The liquidation move down to $91k last Monday was quickly reversed, with a squeeze to $102k initially, but this gave way to somewhat tedious sideways/wedge-style price action with realised volatility compressing. The compressing short term ranges are likely to draw us to an inflection point over the upcoming trading sessions. Below here there is decent support from $96k down to $93k and then further support down at the more major zone of $91–89k. Given last week’s liquidations, positioning is likely notably cleaner here. To the top side there is decent resistance at $100k, which was rejected quite sharply post Friday’s NFP, and then above that again at $102k. Through this level there will be a clear highway technically until we retest the highs/major top-side resistance at $108–110k
The lack of obvious impulsive price action does suggest that this period of sideways price action could possibly extend for longer; it should become evident in the coming 2–3 weeks if the correction that started in December is still in play or if this is just part of a correction to the pre-inauguration rally. Long term we continue to expect a large move to $120k+, however the corrective path could widen out on the downside if the $89k support breaks. Note that a breach of this level wouldn’t necessarily invalidate a view of the eventual move back higher (that would be more apparent closer to $60–65k level)
Market Themes
Global trade war fears hit a peak last Monday, but worries quickly faded as Trump postponed tariffs on Mexico and Canada within 24 hours of announcing them, after constructive conversations with their respective leaders. While the tariffs on China did go into effect, this was broadly expected and could yet still be walked back when Trump and XJP next speak
Risk assets managed to stage a recovery over the course of the week, with SPX reclaiming the 6,000 mark. NFP came in under headline expectations but more in-line with ‘whisper’ expectations, and rates/equities exhibited a fairly muted reaction. Overall the baseline broad macro backdrop remains supportive of risk assets, with tail risks around escalation of trade war/geopolitics
Crypto markets shifted focus quickly from Monday’s liquidations (lows of $90k in BTC and remarkable $2100 in ETH), when it was announced Trump’s Crypto Czar Sacks announced a press conference on Tuesday to ‘outline the administrations plans for digital assets’. BTC rallied to briefly pop back to $102k on Monday night, with hopes of some concrete timeline around the US stockpiling of digital reserves. However the market was ultimately left disappointed as the timeline for anything related to this was pushed back (‘within 170 days’), leaving BTC spot languishing back in a $95–98k range for the rest of the week. Ultimately it seems specific crypto catalysts under the Trump administration are likely to be a trade for H2 onwards
BTC$ ATM implied vols:
After Monday’s liquidation move lower was quickly faded, bringing spot back to the more defined range of $95–100k, implied volatility began its descent lower as the market began to unwind some structural topside positioning for Q1 that had been put on post-election in 2024. The final glimmer of hope was with Sacks’ press conference on 5Feb, which gave a bump to gamma contracts with hopes of some tangible headlines on stockpiling of reserves. However with nothing of note from this meeting except for kicking the timeline further down the road, the market continued to exit positioning for Q1 putting further pressure on implied volatility levels. Realised vol actually clocked in the mid 50s last week on both high frequency and fix-to-fix basis, though a lot was driven by the reversal of Monday’s moves and the overshoot higher on the reversal/hopes into the press conference.
One noticeable theme has been the steepening of the term structure, as the market pushes the timeframe for any crypto specific catalysts under the trump administration. With Sacks not expected to return anything concrete for 90–180 days, the market has continued to unwind positioning for February/March expiries, while some legacy positioning remains for June onwards. The market also saw a large April/December calendar printing (selling April, buying December) which further put steepening pressure on the term structure
BTC$ Skew/Convexity:
Skew prices remained broadly better bid for downside in gamma expiries, with the market more cautious of cross-asset risks (trade-war/tariffs) correlating to volatile moves lower in crypto. On the flip side the market does not seem concerned about the topside tail at all in the short-term and unwinds of topside calls/call-spreads has added further pressure on near-term skews. Further out in June onwards, skew remains stickily high with the structural sentiment still bullish
Convexity was fairly muted outside of gamma tenors, where the compression of the spot range is manifesting in limited demand for local strikes in the $95–100k range, while the market is cautious about being short strikes outside this range especially off these lower vol bases, since realised and implied volatility can pick up aggressively on a break-out either side
Good luck for the week/month ahead!
