Key indicators: (May 19, 4pm -> May 26, 4pm Hong Kong time)
BTC/USD rose 6.8% ($103.2k -> $110.2k), ETH/USD rose 7.3% ($2.405k -> $2.58k)
Congratulations on Bitcoin hitting a new high! After breaking through the previous high, the price first rose all the way to $111.9k, then fell below the resistance level of $108.25-109.75k due to Trumps tariff news and a lot of selling pressure, but has been fluctuating in a narrow range since then. From the current situation, we tend to think that the market will gradually rise in a relatively stable manner (there may be some fluctuations locally), which may soon push the price of the currency to the target price of $125k. Active bilateral transactions may cause the price to continue to move sideways for a few days, especially if the Bitcoin meeting in the next few days does not have a big impact, but we think the next high of the currency price will come soon. If the price of the currency falls back and falls below the key resistance level of $101-101k, the price of the currency may fall further to $93-94k.
Market Theme
Risk sentiment remains in the market, but momentum is starting to taper off. US stocks fell/US bonds rose as Trump threatened to impose 50% tariffs on the EU from early June, but he quickly withdrew the threat and is ready to reach a deal on July 9. Uncertainty about US policy continues to weigh on the dollar, with gold prices continuing to rise to nearly $3,400, while G10 currencies are also gradually moving higher against the dollar.
Despite the weakness in the US stock market, Bitcoin profited from the decline of the US dollar this week, and the price rose to a new high of $112k before encountering some resistance. The news that Trump imposed a 50% tariff on the European Union led to a sell-off of short-term long positions, dragging the spot price back to $107k. However, the price then found good support here and returned to $109k before the cryptocurrency conference. Ethereum continues to stabilize in the range of $2400-2700k, and the market is obviously less and clearer at present. Stablecoins continue to develop actively, and ETF inflows remain strong, but further gains from here may require new catalysts.
BTC ATM Implied Volatility
Last week, as the markets bullish momentum strengthened, realized volatility began to recover from low levels, and short-term high-leverage positions appeared, but were liquidated after Trumps tariff news on the EU was released. Although the local high-frequency volatility rose to the level of the 40s to the early 50s, the final price of the currency still fluctuated in the range of 105-112 thousand US dollars, and the daily realized volatility was also very low, suggesting that the market is still in a state of mean reversion, and the long Gamma positions held by the market were quickly pulled back when the price fluctuated. Therefore, in the absence of directional trading, although the realized volatility has risen, the implied volatility remains stable.
The term structure remains steep, with the market looking to sell front-end expiration dates to support long positions from June to September. Expiration dates unexpectedly rose during the week as the market priced in an additional premium for the upcoming Bitcoin conference in Las Vegas, with the May 28 expiration date including the first day of speakers, and the market priced in a 2% price move on the day. This pricing is low relative to other Bitcoin conferences, but it must be admitted that the importance of the conference is less clear.
BTC Skewness/Kurtosis
After a week of fairly stable price fluctuations, the skewness attempted to break the all-time high as the price rose, but as the price quickly pulled back, the skewness also fell. The short-term skewness even tilted downward due to Trumps tariff incident on the EU on Friday, and the subsequent increase in actual and implied volatility confirmed that the downward bias was reasonable. However, with Trumps rapid change of attitude and the potential positive factors of the upcoming Las Vegas meeting, the front-end skewness tilted upward again.
Kurtosis has continued to decline over the past week as there has been a continued sell-off of the wings. The market is having trouble supporting long positions in the middle and wings and is therefore willing to sell the wings to reduce the impact of recessions. Given the very restrained local movement of spot prices and the possibility of a sharp increase in realized volatility (and implied volatility) to one side (such as last Fridays sharp drop), we think Kurtosis is very worth holding in this environment.
Good luck to everyone this week!
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