Key Indicators: (December 23, 4 PM -> December 30, 4 PM Hong Kong time)
BTC against USD decreased by 1.9% ($95,300 -> $93,500), ETH against USD increased by 3.0% ($3,300 -> $3,400)
Although the price movement over the past week has been quite volatile, it ultimately remained between $92,500 and $99,000, leading to a contraction in actual volatility (at least the volatility between settlement points). We speculate that the next few trading days will maintain this trend, but there is a possibility of volatility during year-end settlements. Additionally, this long price adjustment may end before the year is out and prepare for the next round of increases.
Current support is as low as $92,000, and further down we expect good support at the $90,000 level, while the next support level could drop all the way to $85,000. If we break below the $85,000 support, we would see a more substantial decline, but we believe this scenario is highly unlikely. On the upside, if the price successfully recovers the psychological level of $100,000, it will open up opportunities to reach higher peaks and hit our target price level of $115,000 to $120,000 (expected in the mid to early part of the first quarter).
Market Theme:
During a very quiet holiday week, prices slightly adjusted under the influence of a more hawkish Federal Reserve meeting, while the U.S. stock markets experienced a downward correction and the dollar (against other fiat currencies) strengthened.
The momentum of the cryptocurrency market is beginning to shift downward. The market is currently undoubtedly bullish, yet there are few signs of buyers. Rumors suggest that MSTR will enter a quiet period before their January earnings report, which also reduces the upward pressure on BTC prices in the coming weeks.
BTC ATM Implied Volatility:
BTC ATM Implied Volatility (December 23, 4 PM -> December 30, 4 PM Hong Kong time)
Despite some fluctuations in coin prices, as the prices find balance within the range of $92,000 to $99,000, the overall level of actual volatility is continuing to decline. However, the implied volatility for expirations in February and beyond remains stubbornly high, as the market is still digesting the large demand from earlier this month.
We expect implied volatility to more reasonably decrease in January. The current market pricing for implied volatility in the first quarter averages over 60 points weekly, which historical data suggests may be difficult to sustain. Despite the market re-adjusting positions at the start of the new year and Trump announcing his inauguration on the 20th, we anticipate an increase in volatility in January. However, the BTC asset itself has become more stable and is receiving substantial support from ETF inflows. Therefore, we believe sustainable actual volatility will be in the range of 40-50 (rather than the current pricing exceeding 60 points for February/March and beyond).
BTC Skew/Kurtosis:
Although the implied volatility remains unchanged at lower price levels, the actual volatility below is still quite high, and the skew has continued an upward trend this week. The market is continuing to seek upward opportunities for 2025 and capitalize on the currently lower coin prices. Meanwhile, a large influx of buying earlier this month has created shorts in the middle of the curve.
As the correlation between coin prices and skew is disrupted, the kurtosis is falling unilaterally. Meanwhile, the demand for the lower wing in the mid to long term remains absent (only a few strategic short-term buyers are present to prevent prices from plunging below $90,000).
This concludes the report for 2024! Thank you for reading, and Happy New Year!
