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 movements over the past week were quite volatile, they ultimately maintained between $92,500 and $99,000, leading to a contraction in actual volatility (at least between settlement points). We speculate that the next few trading days will continue this trend, but there may be fluctuations around year-end settlements. Additionally, this prolonged price adjustment could end before the year is out, preparing for the next upward cycle.
Current support is as low as $92,000, and we expect good support at the $90,000 level. The next support level could fall to $85,000. If we break below the $85,000 support, we would see a more substantial decline, but we consider this scenario very unlikely. On the price upside, if the coin price successfully recaptures the psychological level of $100,000, it will open up opportunities for further highs, reaching our target price level of $115,000 - $120,000 (expected in the early to mid-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 market underwent a downward adjustment and the dollar (against other fiat currencies) rose.
The momentum in the cryptocurrency market has begun to shift downward. The market is currently undoubtedly in a bullish position but is struggling to find signs of buyers. Rumors suggest that MSTR will enter a quiet period before the January earnings report, reducing the pressure for a BTC price increase in the coming weeks.
BTC ATM Implied Volatility:
Despite some local volatility in coin prices, as they find balance in the range of $92,000 – $99,000, the overall level of actual volatility continues to decrease. However, the implied volatility for expirations in February and beyond remains stubbornly high as the market digests the significant demand from earlier this month.
We expect implied volatility to decrease more reasonably in January. The current market pricing for first-quarter implied volatility averages over 60 points weekly, which historically is hard to maintain. Despite the market adjusting positions at the beginning of the new year and Trump announcing his inauguration on the 20th, we anticipate seeing an increase in January's volatility. However, BTC assets themselves have become more stable and are receiving considerable support from ETF inflows. Thus, we believe sustainable actual volatility will be in the range of 40 – 50 (rather than the current pricing exceeding 60 points for expirations in February/March and beyond).
BTC Skew/Kurtosis:
Despite the implied volatility remaining unchanged at low price levels, the actual volatility below is also quite high, and the skew has shown an upward trend this week. The market continues to seek opportunities for an increase in 2025, capitalizing on the current lower coin prices. Meanwhile, significant buying flow earlier this month has resulted in shorts in the middle of the curve.
With the correlation between coin prices and skew being disrupted, the kurtosis is declining unilaterally. At the same time, demand for the lower wing side in the medium to long term remains absent (only a few strategic short-term buyers are present to prevent a price drop below $90,000).
The broadcast for 2024 ends here! Thank you all for reading, and Happy New Year!
