Key indicators: (November 18, 4 PM - November 25, 4 PM Hong Kong time)
BTC against USD rose 7.0% ($91,750-$98,200), ETH against USD rose 8.6% ($3,140-$3,410)
BTC against USD year-end (December) ATM volatility increased by 3.0 points (57.0->60.0), year-end 25d skew decreased by -1.0 points (5.9->4.9)
The trend of rising prices continues, but actual volatility is slowing down and momentum is gradually stagnating. These signs suggest that a peak may be emerging in the short term (but whether we have already reached the peak or will continue to break through the 100k price remains to be seen).
We believe that a washout will not lead to a significant drop in coin prices, as there is very good support between 85k-93k USD, and the chaos and frenzy caused by MSTR will temporarily provide enough buy orders for the market. The market price trend aligns well with the Elliott wave theory we have been tracking.
If the price of the coin breaks through 100-104k USD, it will further open the space for the third wave of upward trend (as shown in the figure), and it means that the rise will continue to 130-150k USD, rather than the 115-120k USD we currently believe.
Market theme
In the past week, the 'Trump trade' has continued. The US dollar has risen against other fiat currencies, and US Treasury yields have also been rising. The performance of cryptocurrencies has once again decoupled from the dollar. Bitcoin tested a high of 99.8k USD and lost momentum before the key psychological level of 100k USD. Other altcoins have also shown impressive gains, and ETH has finally awakened from its slumber.
Scott Bessenet has been confirmed as Trump's Secretary of the Treasury, eliminating potential bullish factors from Howard Lutnick possibly being elected.
Last week, MSTR announced the purchase of 55k bitcoins (at an average price of 97,862 USD, with a total value of 5.4 billion USD), fully utilizing the funds raised from selling stocks and issuing convertible bonds. When the price approached the peak, the impact of ETF holders rebalancing their positions exceeded MSTR's continued purchases, thus keeping the overall supply and demand in the market relatively balanced within the price range of 97-100k USD.
ATM implied volatility
Although the price hit 100k USD this week, considering all factors, a stable short-term implied volatility is very reasonable, as the actual volatility has not significantly increased due to the active price of the coin. There is more demand for upside opportunities in the forward market, leading to an increase in March/June implied volatility.
If spot prices struggle to break through 90-100k USD, we expect the market to take profits on short-term positions by the end of the year, leading to increased pressure on the short-term curve, especially with Thanksgiving and Christmas approaching. Naturally, this will cause the term structure to steepen.
Skew/Kurtosis
This week's skew remains relatively stable. As the price of the coin failed to break through the 100k mark, market anxiety about downward correction of the price is growing. In addition, implied/actual volatility is difficult to increase at price peaks, especially in the short term, which suppresses the correlation between price and volatility, further restraining the skew. Further along the curve, the correlation between price and volatility is more evident (implied volatility in March/June/September is higher at price peaks), thus the skew has gained better support at the far end of the curve.
Accompanied by a significant rise in actual volatility this week, kurtosis has also risen sharply. We observe a demand for wing strike prices in the market, especially near the upper 100k. At the same time, there is also demand for short-term lower strike prices in the market, mainly to protect spot and margin.
Wishing everyone good luck in the coming week!
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