Key indicators: (November 25, 4 PM -> December 2, 4 PM Hong Kong time)
BTC against USD down 2.4% ($98,200-> $95,900), ETH against USD up 6.7% ($3,410-> $3,640)
BTC to USD year-end (December) ATM volatility decreased by 4.2 points (60.0->55.8), year-end 25d skew remained unchanged (4.9->4.9)
Spot technical indicators overview:
The price appears to have reached a local peak. Although some well-known companies continue to buy strongly, the upward trend has failed to maintain. This aligns with our view that the market has passed the main upward phase and is stabilizing here before the next volatility.
Our fundamental view is that any correction in price will be relatively mild. Given the strong support below, we may experience lower realized volatility in the coming weeks. However, if the 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 price breaks upwards above $100,000, it will give us the opportunity to reach $110,000-$115,000 earlier (earlier than our expected January-February next year). Conversely, if the price drops below $90,000, $85,000 would be a reasonable support level, and further down the price could fluctuate wildly to 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 highs after Scott Bessen was confirmed as the next Secretary of the Treasury.
Bitcoin failed again to break through the $100,000 mark, triggering a drop to as low as $90,800, but found strong support here. It gradually rose back 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 decent capital inflows, causing spot Ethereum to briefly break above $3,700. Meanwhile, Ripple (XRP) also rose 50% this week.
ATM implied volatility:
After a considerable pullback to $90,800 and subsequent upward correction to $97,000, the price showed solid signs for the first time while exerting downward pressure on implied and realized volatility. Taking this opportunity, it is likely that many year-end positions have been cleared, and overall, last week's liquidation provided more selling pressure to the market.
As we approach year-end and the holiday season, we expect implied volatility to face further downward pressure and naturally show a steeper term structure. However, we find that the market's pricing for year-end to next January's period volatility is already quite extreme. If the price remains within a certain range during this period, this pricing will be difficult to maintain.
Skew/Kurtosis:
The skew once corrected downwards, consistent with the spot price's drop from $99,800 to $90,800, but it was merely a fleeting moment. After the price showed strong support, the skew price recovered most of its decline for the remainder of the week.
Overall, the kurtosis gradually decreased this week, consistent with lower volatility levels, and was also influenced by ongoing selling pressure from bullish wings. The market seems to expect the price to rise at a slower pace from now on.
Wishing everyone good luck in the coming week!