Key Indicators: (November 25th, 4 PM -> December 2nd, 4 PM Hong Kong Time)
BTC down 2.4% against USD ($98,200 -> $95,900), ETH up 6.7% against USD ($3,410 -> $3,640)
BTC against USD year-end (December) ATM volatility down 4.2 points (60.0 -> 55.8), year-end 25d skew unchanged (4.9 -> 4.9)
Spot Technical Indicators Overview
The coin price appears to have reached a local peak. Although some well-known companies are still buying aggressively, the upward trend has failed to sustain. This aligns with our view that the market has passed the major upward phase and is stabilizing here before the next volatility.
Our fundamental view is that any correction in the coin price will be relatively mild. Given the strong support below, we may experience lower actual volatility in the coming weeks. However, if the coin price breaks above $100,000 or below $90,000, there will be greater volatility in the market, so caution is needed outside this range. If the coin price breaks above $100,000, it would give us the opportunity to reach $110,000-$115,000 earlier (sooner than our expected January-February of next year). Conversely, if the coin price drops below $90,000, $85,000 would be a reasonable support level, and further down, the price could fluctuate violently below $76,000.
Market Theme
Last week was relatively calm due to Thanksgiving. The S&P 500 index climbed to 6000, while U.S. Treasury yields continued to slowly retreat from their highs after Scott Besson was confirmed as the next Treasury Secretary.
Bitcoin attempted to break through the $100,000 mark again but failed, triggering a drop to as low as $90,800, where it encountered strong support. It gradually rebounded to the mid-range of $95,000-$96,000. Overall, as MSTR's large purchases were absorbed, the market became more balanced at current levels.
However, we continue to see impressive progress in other cryptocurrencies. Ethereum ETF finally saw some nice inflows, causing spot Ethereum against USD (ETHUSD) to briefly break through $3,700. Meanwhile, Ripple (XRP) also rose 50% this week.
ATM Implied Volatility
After a rather sharp correction to $90,800 and subsequent upward correction to $97,000, the coin price has shown solid signs for the first time, while applying downward pressure on implied and actual volatility. Taking this opportunity, it is likely that many year-end positions have been cleared, and overall, last week's clearing has provided more selling pressure to the market.
As we approach the end of the year and holiday season, we expect implied volatility to face further downward pressure and naturally exhibit a steeper term structure. However, we find that the market's pricing of volatility for the end of the year into January next year is already quite extreme. If the coin price maintains a certain range of volatility during this period, this pricing will be difficult to sustain.
Skew/Kurtosis
The skew was once adjusted downward, consistent with the spot price retreating from $99,800 to $90,800, but it was merely a fleeting moment. As the coin price demonstrated strong support, the skew price recovered most of the decline for the remainder of the week.
Overall, the kurtosis gradually decreased this week, consistent with lower volatility levels, while also being influenced by sustained selling pressure from bullish wing spreads. The market seems to expect the coin price to rise at a slower pace from now on.
Wishing everyone good luck in the upcoming week!
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