BTC Volatility 2-Week Review (March 31 - April 14)
In the past two weeks, despite the chaos in other markets, Bitcoin's price has remained quite strong. Last week, the price touched the initial resistance level of $74,000, which was formed after the U.S. elections last year, twice, and then broke through the mid-term downward range since January. It is now stuck in a strong support area between $81,800 and $82,300, with strong resistance above at between $88,000 and $90,000.
Key Indicators: (April 14, 4 PM - April 31, 4 PM Hong Kong Time)
- BTC against USD rose by 3% (82k USD -> 84.45k USD), ETH against USD fell by 11.1% (1,800 -> 1,620)
Despite the chaotic performance of other markets over the past two weeks, Bitcoin's price has remained relatively strong. Last week, the price touched the initial resistance level of 74k USD, formed after the US elections last year, twice, and then broke through the mid-term downward range since January. It is now stuck in a strong support area between 81.8k-82.3k USD, with strong resistance above at 88-90k USD.
Overall, technical indicators suggest that Bitcoin's price may consolidate in the range of 82k-88k USD over the next few weeks, and the current market positions appear cleaner. If the double bottom at 74k USD holds, it would signify the end of the downward correction period since the election and pave the way for the price to rise to 115k-120k USD in the next month.
Market Themes
The global market has experienced extreme volatility over the past two weeks. Trump's reciprocal tariff policy exceeded the most hawkish expectations, especially as pressure on China escalated into retaliatory measures, resulting in tariffs exceeding 100% on both sides, making trade between the two countries virtually impossible. The VIX panic index soared from 20 at the beginning of April to nearly 60, as the market struggled to digest the impact of the tariff events. Trump spent a week trying to bring countries to the negotiating table but ultimately failed to shift positions. Due to the fragility of the US bond market, Trump announced a 90-day tariff suspension for countries other than China, easing market sentiment. The VIX index closed below 40 last week.
The impact of this event is not limited to the stock market; in fact, the market has shown strong resistance to US assets following the announcement of the tariff policy, causing the DXY dollar index to drop nearly 5% in April alone. Long-term US Treasury bonds, once viewed as "safe-haven assets," also faced selling, resembling a "new emerging asset crisis." It is estimated that the total unhedged dollar assets held globally exceed 10 trillion USD. Therefore, although the pace of dollar value adjustment has slowed, this trend is inevitable as the market readjusts asset hedges from the Trump era.
As for cryptocurrencies, they have recently been significantly affected by asset volatility. Bitcoin has tested the 74-75k USD range multiple times, while Ethereum experienced significant liquidations and briefly dropped to 1,400. However, with the 90-day tariff suspension and the decline in the VIX index, the stock market improved, and Bitcoin began to regain its footing, showing a differentiated trend from traditional markets. Ultimately, we still need a more sustained and stable macro backdrop to support Bitcoin's rise to 88-90k USD; on the downside, we would need new lows in US stocks or new highs in the VIX index for the price to break below 74k USD. Overall, the price is currently stabilizing in a range ahead of Easter.
BTC ATM Implied Volatility
Over the past two weeks, Bitcoin's implied volatility has fluctuated dramatically alongside the stock market's volatility. There doesn't seem to be much demand for buying volatility at lower price levels, except for some strategic short-term protection needs. Therefore, as actual volatility surged, only the implied volatility of short-term contracts rose, leading to an inverted term structure.
With the VIX index gradually stabilizing by the end of this week and the US bonds finding a balance point, it is unlikely that the cryptocurrency market will see higher volatility in the next 90 days. Therefore, we expect to see significant selling on both sides as the price stabilizes within the range. If further chaos occurs in the stock or interest rate markets, the risk of central bank intervention (including potential quantitative easing) will increase, and these tail risks may again push up cryptocurrency volatility.
BTC Skew/Kurtosis
As the VIX rises or US stocks decline, the skew has aggressively tilted towards the downside of the price. Therefore, the current Bitcoin price maintains a relatively high correlation with the S&P index, and the correlation of Bitcoin's price with volatility is similarly reflected in the S&P index. Beyond the April expiration date, the downward slope of the skew is not as pronounced, indicating that there is not a significant structural demand for downside hedging in the market, but we have indeed seen some buyers of June 60-70k USD put options.
The kurtosis ended this week relatively unchanged, despite the significant fluctuations in implied volatility and the high correlation between price and skew (skew drops sharply when the price falls and recovers when the price rebounds). Overall, the recent price has been fluctuating locally while remaining relatively stable in the mid-term range of 74-90k USD, so the market is not very interested in buying wings. Structurally, we still believe that the prices on the wings are too low, based on the relatively volatile volatility and the dynamic performance of spot against skew.
Wishing you good luck next week!
