Key Metrics (September 9, 4pm -> September 16, 4pm Hong Kong time):
BTC/USD + 6.9% ($ 55, 080 -> $ 58, 900) , ETH/USD -0.7% ($ 2, 320 -> $ 2, 305)
BTC/USD December (end of year) ATM volatility -2.9 v (62.4->59.5), December 25 day risk reversal volatility -0.1 v (2.5->2.4)
BTC/USD rebounded strongly from the range support and moved back up to the $58–60k key price zone and is currently trying to find balance amid high price volatility.
The short-term outlook remains bullish, but a break below the $57.5k support level could signal a larger correction
A pullback below $54k would break the long-standing rising flag pattern, suggesting a potential drop below $50k
If the price breaks above $61–62k, the next major resistance will be around $65k, where the market may encounter selling pressure, and the probability before the election is still 50/50
Market Events:
Concerns about “Rektember” earlier this month appear to be overblown, as BTC/USD has rebounded this week after hitting strong support at $52k, briefly breaking through $60k. In contrast, ETH/USD lacks upward momentum and is hovering at $2,300.
After the September 10 presidential debate, US polls tilted slightly in Harris' favor as she was seen as outperforming her opponent. However, as the race remains close to 50/50, there will be limited impact on cryptocurrency prices unless there is more clarity on the race (which may not happen until the actual election)
The market is still swinging between expectations of a 25bp and 50bp rate cut at this week's FOMC meeting; initially after the release of CPI data on Wednesday, the market fully priced in a 25bp rate cut, but then "leaks" from some non-Fed voting members suggested a 50bp rate cut could also come true, and market expectations returned to 50/50.
US stocks have once again found support from local lows as market positioning clearly remains relatively defensive amid concerns of a “September sell-off”; corporate earnings have mostly remained solid; and US economic data has yet to show signs of a breakdown. If the Fed does cut rates by 50 basis points at this point, we would expect further gains in stocks and crypto prices.
ATM Implied Volatility:
Despite the market's high expectation premium for events such as the presidential debate and US CPI, realized volatility remained relatively flat this week. Although the 1-w implied volatility once reached 60, the high-frequency volatility remained in the mid-40s.
There was a surge in demand for options early in the week, but by the end of the week, there was an unwinding of volatility and directional bets, further depressing implied volatility, especially at the front end of the curve.
With the election still 50/50, election volatility pricing has declined slightly, in line with the reduction in premium in the overall volatility curve, and we would expect volatility to rise somewhat as we approach the election.
Election volatility pricing has declined slightly, in line with the reduction in premium on the overall volatility curve. As the probability of the current election outcome remains 50/50, we expect volatility to rise again as we approach the event.
Skewness/Convexity:
Volatility skew and convexity trends were relatively flat this week, with the market focusing on localized options demand for this month’s events.
Since there is no clear correlation between implied volatility and spot price movements (i.e., implied volatility does not respond much to increases or decreases in spot prices), it would be difficult for us to see any significant price corrections leading up to the election. Due to the uncertainty of the election outcome (50/50) and the significant impact of the election outcome on spot prices, we expect the market to adjust more to local strike price fluctuations in the lead-up to the election.
I wish you all good luck next week, and I wish all of you who are participating in Token 2049 have fun!
