Key Indicators: (June 30 at 4 PM -> July 7 at 4 PM Hong Kong Time)
BTC against USD rose 1.1% (from $107.6K to $108.8K), ETH against USD rose 4% (from $2,480 to $2,580)
Cryptocurrency prices continue to hover below the all-time high, encountering strong resistance each time they attempt to break through. We anticipate the market will break through the all-time high in the coming weeks, but there is still a risk of falling back below $100K. If we fail to break through, we may see prices continue to correct down to $93-94K, though this does not affect our long-term bullish outlook. If we successfully break through $113K, prices could quickly rise to $120K, and ultimately reach $125-135K.
Market Themes
With the full onset of the US holiday and summer vacation, we have experienced another calm week. The US non-farm data was surprisingly strong again, dispelling hopes of an early rate cut in July and diminishing the possibility of increased risk appetite in the summer market. Market concerns about the July 9 tariff deadline led to a brief pullback in risk assets during the low-liquidity environment before the weekend, but overall, the market's total positions and leverage do not seem heavy.
The cryptocurrency market saw a return of risk sentiment in the early part of last week. Bitcoin briefly touched above $110K but ultimately fell short of the all-time high. As US economic data broke expectations of an early rate cut, Bitcoin fell alongside the US stock market, and concerns about tariff policies drove the price back to $108K. Locally, Bitcoin's correlation with US stocks and other risk assets remains high, but the market seems to be waiting for a true catalyst to drive prices to a new all-time high - the US Congress has pre-announced a "Cryptocurrency" week starting July 14, which will push cryptocurrency-related bills that week (mainly involving stablecoins). Perhaps this will be the opportunity to trigger sufficient market momentum to break the previous high.
BTC ATM Implied Volatility
Last week's actual volatility was quite low, another week below 30 points (including the weekend, when actual volatility was almost zero). Prices remain comfortably within the $105-115K range, with almost no recent catalysts. However, such low implied volatility is now attracting buyers to purchase low-priced options (buying downside protection for long spot positions, or buying upside call spreads to prepare leveraged positions for a potential breakthrough) - these trades are currently well supporting the bottom of implied volatility.
The current term structure is not steep (compared to historical levels), and the market has fully harvested the remaining term premium. Considering Bitcoin's characteristics, it's easy to return to a high volatility range when prices break through ranges. Having a long Vega on longer-term periods while selling short-term periods as funding (with a steep short-term curve rapidly declining over time) looks like a very attractive position.
BTC Skew/Kurtosis
Skew moved sharply downward before the weekend due to market concerns about potential negative impacts from Trump's tariff news and the failure to break through $110K, causing a downward spike. With market demand for downside risk hedging and essentially low volatility, skew tilted downward. Without further decline over the weekend, skew quickly recovered. Demand in the far-term market exists only above prices, so far-term skew remains more stable.
Kurtosis increased last week as local implied volatility continued to decline, and the market began buying positions outside the price range to capture potential breakout opportunities. However, kurtosis remains at a low level in the far-term period, with opportunities still existing to buy kurtosis in preparation for a price breakthrough and a return to high volatility patterns.
Good luck everyone this week!
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