BTC Volatility Weekly Review (November 3 - 10)

Core Data (Hong Kong Time November 3 16:00 → November 10 16:00) BTC/USD: -1.0% ($107,200 → $106,200) ETH/USD: -1.9% ($3,690 → $3,620)

After finally breaking through the psychological barrier of $100,000 last week, positive news from Washington over the weekend has driven the market to rebound at the beginning of this week, testing the previous support (now turned resistance) level/range of $104,000-$107,000. If it breaks through the $107,000-$108,000 range, given that $108,000-$114,000 is a key/volatile range, we expect the market to show some upward acceleration. If the price effectively breaks through the resistance level, it indicates that this round of long-term adjustment may have been completed, and the market could be preparing to quickly and volatilely test historical highs. Next, we believe this will trigger a larger scale and more lasting adjustment (potentially a sideways adjustment lasting several months). If it fails to break through $107k, it suggests that the market hopes to re-test the $100,000 support level, with a more “complete” downward breakout point approaching $95,000. However, considering that the lows have already reached the $98,000 range, we are just one step away from that level. We believe that hitting a bottom at $100,000 or below will be an opportunity to increase positions, and one should operate cautiously and calmly, leaving ample space to prevent downward pressure from worsening due to stop-loss/liquidation before a larger turning point arrives. Market Theme Risk assets have experienced a turbulent week, as the extension of the U.S. government shutdown raises concerns about its broad impact on the U.S. economy. Additionally, despite the overall resilience of U.S. corporate earnings reports, the market is beginning to worry about the high valuations of artificial intelligence, especially considering the hefty expenditures and investments some companies are making to continue developing and integrating AI (for example, Meta… What if all these expenditures ultimately fail to generate the expected revenue reflected in the pricing?). Ultimately, so far these investments have been paying dividends, so this part of the price movement feels more like a chase of the narrative, especially given the significant rise of some stocks this year; this could just be a healthy correction. Cryptocurrencies have underperformed risk assets (and gold) throughout the year, and as risk assets shift overall, their position has become precarious. BTC eventually fell below $100,000, but the sell-off in the $98,000 - $100,000 range was well absorbed, while ETH dipped down to the $3,000 mark and subsequently found some support. The end of the government shutdown and the possibility of the Federal Reserve cutting rates again in December (especially considering the recent shutdown's impact on the U.S. economy) should support risk assets until the end of the year and may lead to a relief rally. However, after a challenging year and the high opportunity cost of cryptocurrencies, Bitcoin still feels like a “high-risk, low-return” asset in the absence of any specific cryptocurrency catalysts. Therefore, if risk assets unexpectedly turn again before the end of the year, the situation for cryptocurrencies could once again become fragile. BTC implied volatility

Implied volatility has been consolidating overall this week, as (high-frequency) actual volatility remains in the low 40% range, confirming that we have reset to a new foundational level. At the beginning of the week, implied volatility briefly fell but found support after the spot price dropped below $100,000. However, due to a lack of follow-through below this critical level, implied volatility gradually declined before the weekend and only regained support when the spot price quickly rebounded from its lows at the start of the new week. The term structure of implied volatility has started to steepen. In the short term, actual volatility has begun to weaken as spot prices consolidate in a range and lack immediate catalysts to trigger changes. Directional trading (bullish side) has adjusted positions to expire in December and beyond to give the market more time to digest recent price movements. BTC USD Skewness/Kurtosis

When it fell below $100,000, the skew moved downward, but then found good support and rebounded quickly following the news of the end of the U.S. government shutdown over the weekend. With the emergence of technical bullish options buying, the skew began to correct from the bearish side. Structurally, the correlation between the price of the coin and volatility remains evident (implied/actual volatility increases when the coin price drops), and BTC's correlation with traditional stocks/risk assets has become stronger regarding this characteristic. The kurtosis price decreased as the coin price briefly fell below $100,000 and then rebounded to a wide range of $104,000 - $112,000. The volatility of volatility remains high, but the market seems to be seeking a balance within this new price range, as the coin price has dipped and found strong support in the $98,000 - $100,000 range. Any substantial breakout of the $98,000 - $117,000 wide range will structurally trigger a repricing of the skew and bring kurtosis back into focus. Wishing you a successful trading week ahead!