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After the US market closed last night, Bitcoin pulled back to $55,606, then rebounded to around $56,000. Implied volatility is negatively correlated with price. The BTC/ETH term structure shows a bullish trend toward flattening: ETH’s distant end is rising, while front-end volatility remains elevated and inverted. ETH’s front-end IV is higher than BTC’s, reaching a historical high, which may attract bearish volatility strategies to weaken the structure’s upside tilt. Skew has retraced; the price spread of BTC-related options has moved higher, while ETH’s year-end convexity remains high. Trading is relatively balanced, with opportunities for hedging and bullish strategies.

This week, BTC/USD increased by 18.4%, and ETH/USD rose by 27.6%. The presidential election drove BTC to break through 80k and maintain its upward trend, with a short-term target above 100k, mainly supported at 72–74k. ATM volatility declined after the election, skewness remained basically unchanged, and kurtosis decreased, indicating that there is still a risk of volatility above 100k or between 60–65k in the future.

September market volatility intensifies: Non-farm payrolls slightly below expectations, three-month growth hits a new low since the pandemic, 80% of industries experienced negative growth in August, easing rate cut expectations, terminal interest rate drops to 2.9%. The probability of three rate cuts before the end of the year is about 92%. Inflation expectations are under control, CPI is projected at 2.92%, watch for tariff signals. The bond market is strengthening, the stock market remains flat, and volatility may increase in the next two months. Cryptocurrencies are sideways, Bitcoin lags behind, and a defensive strategy is recommended with caution toward token risks.

The recent cryptocurrency market has been experiencing consolidation, with BTC and ETH falling by 4% and 5% respectively. The market is influenced by risk aversion sentiment, leading to a decreased risk appetite among investors. The main support zone is around $65,000. Volatility is gradually decreasing, and short-term options demand is rising, leaving the market full of uncertainty about future trends.

Key Indicators (January 5th, 16:00 Hong Kong time -> January 12th, 16:00 Hong Kong time)
BTC/USD -1.0% ( dropped from $92,600 to $91,700) ETH/USD -0.5% ( fell from $3,165 to $3,150)
The BTC spot market has continued its sideways consolidation trend since the end of November, with decreasing actual volatility frustrating both bulls and bears. The price movement can be viewed as operating within a wedge pattern, which probabilistically leans slightly toward a downward movement (followed by a final reversal). However, given the solid support levels observed over the past two months, this could also be part of a longer-term and more complex upward correction process. No definitive conclusion has been reached yet, but overall, we believe that the downside potential (in terms of magnitude and volatility) from the current position will be limited, while the upside has greater potential for a terminal move.

The article discusses the current state of the U.S. economy and the downturn in the cryptocurrency market. The Federal Reserve faces challenges to its independence, and the latest employment data support a loose monetary policy. Market expectations for rate cuts have diminished, while important data releases such as CPI and PPI will become focal points. Meanwhile, the cryptocurrency market remains weak, with BTC prices hovering, interest declining, but signs of capital outflows stabilizing.

The market has returned to an adventurous mode, with the S&P 500 approaching 7000 points, and foreign investors buying stocks reaching a record high. Despite the market facing dollar depreciation risks, capital inflows remain strong, with small-cap stocks and IPOs warming up. Technical indicators are positive, volatility is decreasing, and stock gains are expanding. Cryptocurrencies are performing steadily and positively, with the market awaiting catalysts.

Although risk sentiment stabilized last week, G7 fixed income markets experienced a challenging week as several non-US headline economic data surprised to the upside. Australia's CPI rose 3.8% year-over-year, higher than the expected 3.6%, causing its 5-year government bond yield to jump by 15 basis points and the AUD to rise 2.5% against the USD for the month. This was followed by Canada’s employment report, which was exceptionally strong and far exceeded expectations (unemployment rate at 6.5%, expected 7.0%), triggering the largest single-day move (+20 basis points) in Canadian 5-year bonds since 2022 and sending the CAD soaring by 2%. In Japan, despite weak capital spending, markets are pricing in a 90% probability of a Bank of Japan rate hike this month, making the dovish Federal Reserve stand out among the G7.
The market widely expects the Federal Open Market Committee (FOMC) this week