At the end of 2024, the price managed to hold the support level of $92,000. At the beginning of the new year, we see the market starting to show a willingness to buy, with the price slightly rising towards the resistance level of $100,000. This strongly suggests that the market is building up for the next increase, accumulating long positions during pullbacks. We believe that in the long term, the price will range between $115,000 and $120,000.
Key Indicators: (December 30, 4 PM -> January 6, 4 PM Hong Kong Time) BTC against USD rose 6.2% ($93.5k -> $99.3k), ETH against USD rose 7.4% ($3.4 -> $3.65k). The spot technical indicators at the end of 2024 show that the price held the support of $92k. As the new year began, we saw the market start to show a willingness to buy, with the price slightly rising towards the resistance level of $100k. This strongly suggests that the market is building up for the next increase, accumulating long positions during pullbacks. We believe that in the long term, the price will range between $115k and $120k. We think that the short-term price peak will be at $100k or slightly above, and we expect sellers to appear around that level. If there is a lack of further follow-up buying, it may trigger a pullback to the range of $95k-$96k. However, if the price fully breaks through $100k, the next peak will appear at $102k-$103k, followed by $104k-$105k, and eventually reach the previous high of $108.5k. On the downside, initially, the support is at $95k-$96k, and continued declines will reach below $92k.
The market theme is another tumultuous holiday week. The cryptocurrency market once again dipped within a certain range, with BTC against USD breaking below $93k; ETH against USD breaking below $3.3k. However, the arrival of the new year has brought upward momentum to the market. It seems that the market is adjusting positions ahead of Trump's inauguration this month. Among other assets, the 'Trump trade' has also regained momentum. The dollar is dominant in trading against G10/Asia, while the S&P 500 index (SPX) has started to recover after a decline at the beginning of the year. On the macro front, data is relatively sparse this week, until Friday’s non-farm payroll data is released. The market is particularly looking forward to this data, especially after December’s relatively hawkish stance from the Federal Reserve caught the market off guard. If there are any unexpected downsides, the market may quickly reprice in preparation for faster rate cuts.
BTC implied volatility Despite significant local fluctuations in price, the overall actual volatility has been continuously declining, further leading to a sustained decrease in implied volatility, especially for January expiration. Currently, the implied volatility for January expiration is already lower than the same period last week, despite January witnessing Trump's inauguration and ETF rebalancing flow at the beginning of the year. On the far end of the curve, implied volatility still shows resilient buying interest. This is because the market is still digesting the substantial demand that emerged in December, especially for expirations in February and March. Considering that a correction has already appeared in January expiration, we expect to see implied volatility on the far end gradually return to normal.
BTC Skew/Kurtosis With the market's liquidity fully recovering and the lower actual volatility returning from the low price points at the end of the year, this week’s skew has shown a downward trend. If the market continues to rise gradually before the inauguration, we expect actual volatility to perform poorly as the distribution of the market on the upside is relatively even. However, if we see a sharp decline in price again, players in the market may actively participate in bets above the price. For the same reasons mentioned above, kurtosis remains relatively low. The demand for wingside has started to diminish as the spot market has moved away from the potential large slippage around $90k. At the same time, the demand for single buy above has gradually decreased, or has shifted to bullish spreads, exerting selling pressure on kurtosis. The low correlation between spot and skew has also weighed down the price of kurtosis.
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