Key Indicators: (November 18th, 4 PM - November 25th, 4 PM Hong Kong Time)
BTC against USD is up 7.0% ($91,750-$98,200), ETH against USD is up 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 reached the peak or will continue to break through the $100,000 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, and the chaos and frenzy caused by MSTR will temporarily provide sufficient buy orders in the market. The market price movements align well with the Elliott wave theory we have been tracking.
If the coin price breaks through $100-104k, it will further open up space for a third wave of rising prices (as shown in the chart), and it would mean that the rise will extend to $130-150k, rather than the $115-120k we currently expect.
Market Themes
In the past week, the 'Trump trade' has continued. The dollar has risen against other fiat currencies, and U.S. Treasury yields continue to rise. The performance of cryptocurrencies has once again decoupled from the dollar. Bitcoin tested a high of $99.8k but lost momentum before the key psychological level of $100k. Other small coins have also shown remarkable gains, and ETH has finally awakened from its slumber.
Scott Bensent has been confirmed as Trump's Secretary of the Treasury, eliminating potential bullish factors from Howard Lutnick's possible election.
Last week, MSTR announced it had purchased 55k Bitcoins (average price of $97,862, total value of $5.4 billion), fully utilizing the funds raised from selling shares and issuing convertible bonds. As prices approached highs, the impact of ETF holders rebalancing their positions outweighed MSTR's continued purchases, thus keeping the overall supply and demand relatively balanced in the $97-100k price range.
ATM Implied Volatility
Although prices hit $100,000 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 movements. There is more demand for upside opportunities in the forward market, leading to an increase in implied volatility for March/June.
If spot prices struggle to break through $90-100k, we expect the market to take profits on short-term positions as the year-end approaches, leading to increased pressure on the short-term curve, especially with Thanksgiving and Christmas coming up. Naturally, this will lead to a steepening of the term structure.
Skew/Kurtosis
This week, the skew remains relatively stable. As the coin price failed to break through the $100,000 mark, market anxiety about a downward correction is growing. Furthermore, implied/actual volatility is difficult to enhance at price peaks, especially in the short term, which suppresses the correlation between price and volatility, further inhibiting skew. At further out on the curve, the correlation between price and volatility is more pronounced (implied volatility for March/June/September is higher at price peaks), thus skew receives better support at the long end of the curve.
Accompanied by a significant rise in actual volatility this week, kurtosis has also increased sharply. We observe demand for wing strike prices in the market, especially around the upper $100k range. At the same time, there is also demand for near-term lower strike prices in the market, primarily to protect spot and margin.
Wishing everyone good luck in the coming week!
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