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)
The price movements over the past week, although quite volatile, 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 to maintain this trend, but there could be volatility at year-end settlements. Meanwhile, this prolonged price adjustment might conclude before year-end and prepare for the next round of increases.
The current support level is as low as $92,000, and we expect to find good support around $90,000. The next support level will drop all the way to $85,000. If we break below the $85,000 support, we would see a more substantial decline, but we believe this scenario is very unlikely. On the upside, if the coin price successfully recovers the psychological level of $100,000, it will open opportunities to reach our target price level of $115,000-$120,000 (expected in the early to mid part of the first quarter).
Market Themes:
During a very quiet holiday week, prices made slight adjustments under the influence of a more hawkish Federal Reserve meeting, while the U.S. stock market experienced a downward correction and the dollar (against other fiat currencies) rose.
The momentum of the cryptocurrency market has begun to shift 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:
BTC ATM implied volatility (December 23, 4 PM -> December 30, 4 PM Hong Kong Time)
Despite some fluctuations in coin prices locally, as the prices find balance within the range of $92,000 to $99,000, the overall level of actual volatility is continuing to decline. However, the implied volatility for February and beyond remains stubbornly high, as the market is still digesting the significant demand from earlier this month.
We expect the implied volatility to decrease more reasonably in January. The current market pricing for the first quarter's implied volatility averages over 60 points weekly, which historically is difficult to sustain. Although the market is readjusting positions at the start of the new year and Trump will announce his inauguration on the 20th, we anticipate seeing an increase in volatility for January. However, BTC assets themselves have become more stable and are receiving good support from ETF inflows. Therefore, we believe the sustainable actual volatility will range between 40-50 (instead of the current pricing exceeding 60 points for February/March and beyond expiration dates).
BTC Skew/Kurtosis:
Although the implied volatility remains unchanged at low prices, the actual volatility below is also quite high, and the skew has shown an upward trend this week. The market continues to seek upward opportunities for 2025 and capitalizes on the current lower coin prices. Meanwhile, the significant buying flow earlier this month has resulted in shorts in the middle of the curve.
As the correlation between coin prices and skew has been disrupted, the kurtosis has dropped unilaterally. At the same time, demand for the lower wing in the medium to long term remains absent (only some short-term strategic buyers are present to prevent the coin price from crashing below $90,000).
This concludes the report for 2024! Thank you all for reading, and Happy New Year!
