Key Indicators: (4 PM May 26 -> 4 PM June 2 Hong Kong Time)

BTC against USD fell by 4.4% (110.2k USD -> 105.4k USD), ETH against USD fell by 2.7% (2,580 -> 2,510 USD)

Despite Bitcoin's pullback from its highs over the past week, the price has essentially been consolidating sideways, which has not affected the overall upward trend. We maintain that the market will attempt to break upward again in the coming weeks or months, potentially pushing us towards the final target of 120-130k USD. Of course, the exact timing is difficult to determine, and if the support level of 99-101k USD is not held, the completion of this upward movement may be delayed until late summer. Currently, we believe that strategically increasing long positions or re-entering can be done at slightly lower support levels. If the price does break below 99k USD, it may drop to the range of 93-94k USD. Above the price, the first resistance level appears at 108-109k USD, followed by a new high at 112k USD.

Market Themes

• Midweek last week, the U.S. International Trade Court ruled that the Trump administration's implementation of comprehensive tariffs under the International Emergency Economic Powers Act (IEEPA) was illegal, leading to a brief rally in risk markets. However, the stock market did not continue to rise, and this risk rebound that started in early April seems to have reached its limit. Meanwhile, the volatility of various assets has hit new lows, further confirming that the market is exhausted and has undergone significant deleveraging. Overall, the market is looking forward to the upcoming summer holidays, showing no concern for any potential surprises, while also ignoring some negative news (such as Trump's tweet on Friday claiming that China violated the trade agreement).

• Bitcoin's remarkable gains finally lost momentum last week, ending the week with a decline for the first time in two months (as of New York's Friday close). In May, total inflows into IBIT ETFs exceeded 6 billion USD. This recent downward adjustment is mainly technical, accompanied by some short-term leveraged longs being liquidated, but overall actual volatility remains at a low level. As long as this situation continues, we should continue to see passive inflows during small dips, especially considering the weakness in dollar-related markets due to U.S. policy uncertainty.

BTC ATM Implied Volatility

• The week before last, the price broke through key levels to reach historical highs, followed by a rapid decline due to Trump's comments on EU tariffs, which led to a brief spike in actual volatility. Last week, actual volatility continued to decline. Despite the wide range of price activity last week, the high-frequency actual volatility only reached levels seen in mid-30s. As the price returned to the 103-106k USD range that had trapped us for weeks, we expect that unless there is an unexpected catalyst, price activity will remain quiet, continuing to suppress actual volatility, ultimately putting pressure on implied volatility and leading to a growing number of long Gamma positions in the market.

• The term structure remains steep, with the market still struggling to support short positions on the June to September longs. Additionally, since the Las Vegas conference did not produce any surprises, actual volatility remains very quiet, with short-term expirations dropping heavily again. This makes it increasingly difficult to continue selling front-end support for the longer term and further pressures the volatility for June/July.

BTC Skew/Kurtosis

• Skew this week is more downward, aligning with the short-term market momentum shift. Even when reaching historical highs, the market showed little interest in buying call options, while continuing to sell during slight price increases to reduce exposure. The combination of these factors has led to the market's reluctance to pay a premium for call options. Meanwhile, the market is aware of the dangers below the price; if it breaks below the 99-101k USD support level or if the risk asset sentiment shifts, price movements could become very volatile.

• Kurtosis has remained mostly flat over the past week, slightly declining. This is due to ongoing selling of wing strikes, while the market is trying to support both mid-strikes and long positions on either side of the price, thus willing to slightly lower sell both sides to mitigate Theta losses. Considering the currently quite restrained price movements and the potential for actual volatility (as well as implied volatility and skew) to surge after breaking the range, we believe it is very worthwhile to hold long wing positions at this time.

Wishing everyone good luck this week!