BTC Volatility Weekly Review (November 18 - November 25)
Key Indicators: (November 18, 4 PM - November 25, 4 PM Hong Kong Time)
BTC against USD increased by 7.0% ($91,750-$98,200), ETH against USD increased by 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 25 d skew decreased by -1.0 points (5.9->4.9)
The upward trend in 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 enough buy orders for the market. The market price movements align well with the Elliott Wave Theory we have been tracking.
If the coin price breaks through $100k-$104k, it will further open up space for a third wave of upward movement (as shown in the chart), and it would mean that the rise will extend to $130k-$150k, rather than the $115k-$120k we currently anticipate.
Market Themes:
In the past week, the "Trump trade" has continued. The dollar has risen against other fiat currencies, and U.S. Treasury yields have also been on the rise. The performance of cryptocurrencies has once again decoupled from the dollar. Bitcoin tested a high of $99.8k but lost momentum before the critical psychological level of $100k. Other altcoins have also seen astonishing gains, and ETH has finally awakened from its slumber.
Scott Bensent has been confirmed as Trump's Secretary of the Treasury, eliminating the potential bullish factor of Howard Lutnick being elected.
Last week, MSTR announced the purchase of 55k Bitcoins (at an average price of $97,862, totaling $5.4 billion), fully utilizing the funds raised from selling stocks and issuing convertible bonds. As prices approached their peak, the impact of ETF holders rebalancing their positions outweighed MSTR's continued purchases, resulting in a relatively balanced overall supply and demand in the market within the $97k-$100k price range.
ATM Implied Volatility:
Although prices briefly surged towards $100k this week, considering all factors, a stable short-term implied volatility is very reasonable, as 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 $90k-$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 steeper term structure.
Skew/Kurtosis:
This week, skew remained relatively stable. As the coin price failed to break through the $100k barrier, market anxiety about a downward correction is growing. Additionally, implied/actual volatility has struggled to rise at price peaks, especially in the short term, which suppresses the correlation between price and volatility and further dampens skew. At further points 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 far end of the curve.
With the volatility of actual prices significantly rising this week, kurtosis has also increased sharply. We observe a demand for wing strike prices in the market, especially near the upper $100k level. At the same time, there is also demand for short-term lower strike prices in the market, mainly for protecting spot and margin.
Wishing everyone good luck in the coming week!
