Key Indicators: (December 23, 4 PM -> December 30, 4 PM Hong Kong Time)
BTC against USD down 1.9% ($95,300 -> $93,500), ETH against USD up 3.0% ($3,300 -> $3,400)
Despite significant volatility in price movements over the past week, it ultimately remained within the range of $92,500 - $99,000, leading to a contraction in actual volatility (at least the volatility between settlement points). We speculate that this trend will continue over the next few trading days, but there may be fluctuations during year-end settlement. At the same time, this prolonged price adjustment may end before year-end and prepare for the next round of increases.
Current support is as low as $92,000, and we expect to see good support at the $90,000 level. The next support level could drop all the way to $85,000. If we break below the $85,000 support, we will see a more substantial decline, but we believe this scenario is very unlikely. Looking above the price, if the coin price successfully regains the psychological level of $100,000, it will open up opportunities for higher peaks, reaching our target price level of $115,000 - $120,000 (expected in the mid to early part of the first quarter).
Market Themes
During a very quiet holiday week, prices consolidated slightly 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 currencies) strengthened.
The momentum in the cryptocurrency market is starting to turn downward. The market is undoubtedly in a bullish position, yet it is difficult to find signs of buyers. Rumors suggest that MSTR will enter a silent period before its January earnings report, which also reduces the pressure for BTC prices to rise in the coming weeks.
BTC ATM Implied Volatility
Despite some local volatility in coin prices, as they find balance within the range of $92,000 - $99,000, the overall level of actual volatility is continuously declining. However, the implied volatility for expirations in February and beyond remains stubbornly high, and the market is still digesting 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 difficult to maintain. As the market adjusts positions at the beginning of the New Year, and with Trump set to announce his inauguration on the 20th, we expect to see an increase in volatility in January. However, BTC assets themselves have become more stable and received considerable support from ETF inflows. Therefore, we feel that sustainable actual volatility will range within 40 - 50 (rather than the current pricing exceeding 60 points for February/March and later expiration dates).
BTC Skew/Kurtosis
Although implied volatility remains unchanged at low price levels, the actual volatility below is still quite high, and the skew has shown an upward trend this week. The market continues to seek opportunities for increases in 2025 and aims to take advantage of the current lower coin prices. Meanwhile, the massive buying flow earlier this month has created a bearish position in the middle of the curve.
As the correlation between coin prices and skew has been disrupted, kurtosis is trending downwards. Meanwhile, there is still a lack of demand for the downside wing in the medium to long term (only some short-term strategic buyers are present to prevent prices from crashing below $90,000).
The broadcast for 2024 ends here! Thank you all for reading, and Happy New Year!
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