Key Metrics: (December 2nd 4 PM -> December 9th 4 PM Hong Kong Time)

• BTC against USD increased by 3.9% (95,900 -> 99,600 USD), ETH against USD increased by 7.4% (3,640 -> 3,910 USD)
• BTC against USD December (end of year) ATM volatility decreased by 0.6 points (55.8 -> 55.2), 25 d skew decreased by 0.7 points (4.9 -> 4.2)

• Looking at the trend, the spot market is still correcting the price. Although the coin price set a new high above 100 thousand USD, it quickly and heavily fell back. We believe that any rise will be met with selling, but there will be significant market demand during declines, leading to a one-sided correction trend (price movements gradually flattening out). Currently, the resistance level is mainly at 99 thousand - 104 thousand USD, with support starting from 94 thousand down to 85 thousand USD.
• Although the price will initially fluctuate within this range, we expect actual volatility to eventually weaken (provided the price does not break through). If the price falls below, we will be brought back to 76 thousand USD. Any substantial upward breakthrough will lead to the price reaching the ultimate range of 115 thousand - 120 thousand USD earlier than expected (which we originally anticipated would occur between January and February next year).

Market Themes:

Bitcoin finally broke through the psychological barrier of 100 thousand USD last Thursday, causing the price to test 104 thousand USD twice, both times receiving good support. Initially, it felt like this level was the answer that the recent bull market trend was eagerly hoping for, but momentum quickly weakened within the next 24 hours, and we fell back below 100 thousand USD. This triggered the liquidation of fresh long positions above 100 thousand USD, causing the price to drop as low as 90 thousand USD. However, it did not last long, as the market regained 100 thousand USD during the New York trading session and stabilized relatively within the range of 96 - 100 thousand USD.

Due to the overall bullish market sentiment, other cryptocurrencies continued to rise. The price of ETH against USD also pushed above the psychological barrier of 4 thousand USD, but it is still 20% away from its historical high.

Price fluctuations in traditional financial markets were somewhat calm. The implementation of martial law in South Korea caused brief concerns (leading to a temporary drop in Bitcoin to 93 thousand USD), but it was soon confirmed to be just a local political turmoil that quickly settled down. China once again promised to provide stimulus policies next year in response to the generally weak market since Trump's election and his promise to introduce a new round of tariffs. Finally, U.S. labor data continued to show signs of gradual weakening. Last week's non-farm payroll report did not impact the Federal Reserve's gradual rate cuts. Therefore, overall, we continue to believe that the macro backdrop supports risk assets.

BTC ATM Implied Volatility:

• Overall, the market volatility last week was very high. Initially dropping to 93 thousand USD due to South Korea's martial law, then breaking through 100 thousand USD and approaching 104 thousand USD, followed by a drop back down to a low of 90 thousand USD due to liquidations. Despite such volatility, the high-frequency actual volatility was around 60 points, which is merely the market pricing the average weekly implied volatility for the first quarter of next year!
• Therefore, most of the spikes in implied volatility have subsided, especially for expiration dates before the end of the year. Unless the price range of 90 - 104 thousand USD is completely broken, it will be difficult for actual volatility to maintain at that level. However, on the far end of the term structure, the market saw significant buying flow, especially above the March and June expirations (strike prices of 150 - 200 thousand USD), leading to elevated premiums after the January expiration. Again, it is emphasized that considering last week's high actual volatility, maintaining a weekly implied volatility of 60 points will be difficult for the market before a significant breakthrough in spot prices.

BTC Skew/Kurtosis

• Despite some quite intense corrections in the spot market, the skew price has remained relatively stable this week. Ultimately, market demand is still concentrated above the price, and there is little demand for hedging below the coin price in the short term.
• Accompanied by the rise in actual volatility, the kurtosis has generally increased this week, also due to the market's purchasing demand for a single wing (especially the upper wing).

Wishing everyone good luck in the coming week!