BTC Volatility Weekly Review (May 12–19)

May 19 at 4 PM Hong Kong time BTC dropped 1.5% against USD (from $104.8K to $103.2K), ETH dropped 5.3% against USD (from $2.54K to $2.405K) BTC spot technical indicators against USD:

Since the coin price broke into the higher coin price range ($101–110 thousand), the volatility of market activity has been low, both high and daily. The balanced buying and selling transactions on both sides control the currency price well. Considering the market's usual volatility cycle, we find that the volatility cycle of the past year and a half has generally been 14–20 days, and rarely exceeds 20 days, suggesting that the market's patience may run out in the coming week. Either we will try to break through the all-time high again, or we will fall into $90–95 thousand for a long-term consolidation. While we still acknowledge that there may be a pullback during the session, it is worth noting that the recent support for the coin price action has been very strong, and we are more confident that the rally pushing up to $125 thousand is on the horizon and will arrive sooner than we initially expected. The current price trend is not yet clear, but we expect the market to follow sharply after the price breaks above $110 thousand. Market Theme: Last week, the overall risk sentiment in the market picked up, and the U.S.-China tariffs returned to their pre-elevation starting point (is this all just a nightmare?). U.S. macro data was also positive for the market, including a slightly slower CPI index. U.S. equities have now completely flattened the sell-off triggered by the trade war and are beginning to eliminate the pricing revaluation caused by the "U.S. economic slowdown". Moody's downgraded Treasuries from AAA to AA 1 didn't make a big splash as the "knee-jerk reaction" of U.S. equities quickly subsided, but the U.S. dollar and long-term U.S. Treasuries did downprice accordingly. From a macro fundamentals perspective, any next rally in U.S. equities will be very painful, and the market has been forced to lighten or unwind positions over the past week at relatively cautious/pessimistic levels for many. The bitcoin market is still well in the range despite the fact that Saylor continues to actively "buy down" (7,390 BTC( was bought at an average price of $103.5 thousand last week). There are still a lot of sell orders at $105–107,000, which briefly rose on Monday but then quickly faded and fell to $102,000 before returning to the median of $101–107,000, a range we have been stuck in for weeks. After briefly peeking at the $3,000 figure, Ethereum touched $2.8,000 before retreating before stabilizing at the $2,500 level BTC ATM implied volatility

It has been another week of low volatility. Before the rapid fluctuations of the coin price on Monday, the volatility was only a bit over 30, leading to a continuous decline in implied volatility last week, and the increase on Monday morning quickly disappeared. Overall, it feels like the market still holds long volatility positions, as there is significant selling pressure on both sides of the coin price fluctuations. As we continue to be suppressed in the range of 101–107 thousand dollars, the demand for options will also remain muted. The volatility term structure remains very steep, with June and July expiration dates falling at a rate of 1–1.5 points (not considering changes in the term structure). This means that even holding long positions in the far end is very challenging (despite the absolute level of implied volatility being low). Market makers appear to hold long positions for June or July and are continuously selling the front end to support losses at the back end. This is also why the front end is being pushed down so low (almost as low as the actual volatility). BTC Skewness/Kurtosis

After a relatively stable week, skewness skewed sharply above $106,000 on Monday morning, but was then pulled back to $102,000 in a very volatile manner, leading to a correction in skewness. However, with a lot of buying demand at $100–101 thousand, the market is increasingly worried that the price will move wildly above all-time highs, so the skewness price is skewed to the top again. The kurtosis remained sideways again after bouncing back from the lows, and the continued selling pressure is still suppressing the kurtosis. But the market is also aware of the possibility of a sharp rise in real volatility outside the $101–107 thousand range, so the willingness to sell outside the range is decreasing. Wishing everyone good luck this week!