Key indicators: (September 16, 4:00 pm, Hong Kong time -> September 23, 4:00 pm, Hong Kong time):

• BTC/USD+7.8%（$58,900 -> $63,500），ETH/USD +14.5%（$2,305 -> $2,640）

• BTC/USD December (end of the year) ATM volatility -0.1v (59.5->59.4), December 25d risk reversal volatility +0.8v (2.4->3.2)

Overview of spot technical indicators

• After the short-term bullish support discussed last week was tested, the spot price gradually recovered and moved significantly higher after the Fed FOMC meeting, rising to the $64-65k range resistance. The market has been hovering in this range for the past few trading days, but BTC is currently underperforming above $64k.

• From a technical analysis perspective, we expect the price to consolidate and form support in the $61.5k to $64k range. If it breaks out of this range, the spot price may be expected to further challenge the highs close to $70k.

• It is worth noting that if the price breaks through the upper limit of the range, it will be accompanied by a breakthrough of the long-term flag top (see the figure below), which may trigger greater market fluctuations:

Market events:

• The Fed’s FOMC meeting chose to start the rate cut cycle with a 50 basis point rate cut, which greatly boosted the market sentiment of stocks and cryptocurrencies (especially altcoins), while gold and silver prices also rose. Interestingly, the dollar did not weaken further against the G10 currencies, which suggests that the dollar’s ​​position may have been overstretched, limiting the dollar’s ​​downside.

• U.S. presidential polls continue to slightly favor Harris, but this has not weighed on cryptocurrency prices as the short-term narrative focus shifts to the Federal Open Market Committee’s rate cuts.

• Harris still maintains a slight lead in the polls for the U.S. presidential election, but the impact on cryptocurrency prices is limited as the short-term market focus shifts to the Federal Reserve's interest rate cuts.

ATM Implied Volatility:

• Except during FOMC meetings, realized market volatility remained subdued as the market awaited new catalysts. High-frequency and fixed-term volatility data showed realized volatility remained around 45, while the 4.5% move in the morning after the Fed meeting slightly exceeded the equilibrium point that the market had priced in for the event (which was raised from 2.5% to 3.6% before the event).

• The lack of clear direction in the market ahead of the FOMC meeting and further unwinding of bearish hedges have weighed on volatility. Nevertheless, with the market trading at range lows and the election approaching, implied volatility has remained supported in most cases.

• At the beginning of the week, the contract was heavily sold off near the expiration date, and then faced pressure before the Fed meeting; then, it was sold off again over the weekend and failed to break through the key resistance level of $64-65k. On September 23, the spot price briefly rose to the upper limit of the range, but it quickly faded, and then the Gamma contract was also sold off heavily.

• The market has stripped out the risk premium from the front end of the curve, so election volatility has again fallen slightly. Given that the election odds are still close to 50/50 at the moment, we expect volatility to rise further as we get closer to the election.

Skewness/Convexity:

• The price skew is tilted upwards this week, with the market looking to break through the $64-65k range resistance to drive a new leg higher in prices. This is reasonable in the short term, but structurally, Fed policy alone does not seem to be enough to drive spot prices to new all-time highs and a new volatility regime until after the election.

• The market’s unwinding of put options this week (selling butterfly/buying risk reversal) has reduced the butterfly premium. On the other hand, since the FOMC, upside demand has mainly come from call spread strategies, further depressing the premium level.

Good luck to everyone this week!

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