Key Indicators: (March 31, 4 PM - April 14, 4 PM Hong Kong Time)

  • BTC against USD rose 3% ($82,000 -> $84,450), ETH against USD fell 11.1% ($1,800 -> $1,620)

  • Over the past two weeks, despite chaos in other markets, Bitcoin's price has remained quite strong. Last week, the price touched the $74,000 initial resistance level formed since the end of last year's U.S. election twice, subsequently breaking through the mid-term downtrend since January. It is now trapped within a strong support zone of $81,800-$82,300, with strong resistance overhead between $88,000-$90,000.

  • Overall, technical indicators suggest that Bitcoin's price may consolidate within the range of $82,000-$88,000 over the next few weeks, and current market positions appear cleaner. If the double bottom at $74,000 continues to hold, it would signal the end of the correction period since the election and pave the way for the price to rise to $115,000-$120,000 in the next month.

Market Theme

  • The global markets have experienced extreme volatility over the past two weeks. Trump's reciprocal tariff policy has exceeded the most hawkish expectations, especially as his pressure on China has ultimately evolved into retaliatory escalation, leading to both countries imposing tariffs exceeding 100%, which in other words makes trade exchanges between the two countries impossible. The VIX fear index soared from 20 at the beginning of April to nearly 60, as the market struggled to digest the impacts of the tariff events. Trump spent a week trying to bring countries to the negotiating table but ultimately failed to shift positions. Due to the fragility of the U.S. bond market, Trump announced a 90-day tariff suspension on other countries besides China, alleviating market sentiment. The VIX index returned to below 40 by the end of last week.

  • The impact of this event is not limited to the stock market; in fact, the market showed significant resistance to U.S. assets after the announcement of the tariff policy, causing the DXY dollar index to fall nearly 5% in April alone. Long-term U.S. Treasury bonds, once seen as a 'safe haven asset', also faced selling, resembling a 'new emerging asset crisis'. It is estimated that the globally held unhedged dollar assets exceed $10 trillion. Therefore, although the pace of adjustment in the dollar's value has slowed, this trend is inevitable as the market readjusts asset hedges from the Trump era.

  • As for cryptocurrencies, they have recently been largely influenced by asset volatility. Bitcoin has repeatedly tested the $74,000-$75,000 range, while Ethereum experienced significant liquidations and briefly dropped to $1,400. However, with the 90-day tariff suspension and the decline in the VIX index, conditions in the stock market improved, allowing Bitcoin to regain its footing, showing a differentiated trend compared to traditional markets. Ultimately, we still need a more sustained and stable macro backdrop to support Bitcoin rising to $88,000-$90,000; on the downside, we need new lows in U.S. stocks or new highs in the VIX index for the price to fall below $74,000. Overall, the price is currently stabilizing in a sideways pattern before Easter.

BTC ATM Implied Volatility

  • Over the past two weeks, Bitcoin's implied volatility has fluctuated wildly alongside stock market movements. There don't appear to be many buyers of volatility on the downside, aside from some strategic short-term protection needs. Therefore, with actual volatility surging, only short-term contracts' implied volatility has risen, leading to an inverted term structure.

  • With the VIX index gradually stabilizing towards the end of this week, and U.S. bonds finding a balance point, it is unlikely that the cryptocurrency market will see significantly higher volatility in the next 90 days. Therefore, we expect to see substantial selling on both sides as the price stabilizes within a range. If there is further chaos in the stock or interest rate markets, the risk of central bank intervention will rise (including potential quantitative easing), and these tail risks may again push up the volatility of cryptocurrencies.

BTC Skew/Kurtosis

  • As the VIX rises or U.S. stocks fall, the skew's pricing aggressively leans towards the downside of the cryptocurrency price. Therefore, Bitcoin's price currently maintains a relatively high correlation with the S&P index, and the correlation of Bitcoin's price with volatility and the S&P index is similarly pronounced. Beyond the April expiration date, the downward skew is not as pronounced, so there isn't a significant structural downward hedge demand in the market, but we are seeing some buyers of June $60,000-$70,000 put options.

  • Kurtosis ended the week with little change, despite the significant fluctuations in implied volatility and the high correlation between price and skew (skew plunges sharply when the price drops, and recovers when the price rebounds). Overall, the recent price movements have been mostly localized, while relatively stable within the mid-range of $74,000-$90,000, leading to a lack of interest in buying on the wings. Structurally, we still believe the prices on the wings are too low, based on the highly volatile volatility and the dynamic performance of spot prices concerning skew.

Wish you good luck next week!