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

BTC against USD dropped 4.4% ($110,200 -> $105,400), ETH against USD dropped 2.7% ($2,580 -> $2,510)

Despite Bitcoin's pullback from its high, the price has been essentially consolidating and has not affected the overall upward trend. We continue to believe that the market will attempt to break upward again in the coming weeks or months, potentially pushing us to the final target of $120-130k. Of course, the exact timing is difficult to determine, and if the support level of $99-101k is not maintained, this wave of increase might be delayed until late summer. Currently, we believe that a small dip below the support level is an opportunity to strategically increase long positions or re-enter. If the price truly breaks below $99k, it could drop to the $93-94k range. The first resistance level appears at $108-109k above the current price, followed by a new high at $112k.

Market Themes

• Last week, the US International Trade Court ruled that the Trump administration's use of the International Emergency Economic Powers Act (IEEPA) for comprehensive tariffs was illegal, leading to a brief rally in risk markets. However, the stock market did not continue to rise, and this risk rebound that began in early April seems to have reached its limit. Meanwhile, volatility across assets has hit new lows, further confirming that the market is exhausted and has significantly reduced positions. Overall, the market is anticipating the upcoming summer holiday, not worried about any potential surprises, and turning a deaf ear to negative news (such as Trump's tweet on Friday claiming China violated the trade agreement).

• Bitcoin's remarkable surge finally lost momentum last week, ending the week with a decline for the first time in 2 months (calculated by New York Friday closing time). In May, the IBIT ETF saw total inflows exceeding $6 billion. This correction 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 continues, we should continue to see passively flowing funds during small dips, especially considering the soft dollar-related markets due to US policy uncertainty.

BTC ATM Implied Volatility

• The previous week saw a price breakthrough to historical highs, followed by a rapid decline due to Trump's comments on EU tariffs, causing a brief rise in actual volatility. Last week, actual volatility continued to decline. Despite significant price activity last week, high-frequency actual volatility remained around the mid-30s. As the price returns to the $103-106k range that trapped us for weeks, we expect price activity to remain quiet unless there's an unexpected catalyst, continuing to suppress actual volatility and ultimately pressuring implied volatility, leading to more long Gamma outside the price activity range.

• The term structure remains steep, with the market still trying to support June to September longs with short-term shorts. With no surprising developments from the Las Vegas conference and actual volatility very quiet, short-term expiration dates have again significantly dropped. This makes it more difficult to continue selling the front end to support the forward, further pressuring volatility in June and July.

BTC Skew/Kurtosis

• Skew this week is more biased downward, consistent with the short-term market momentum shift. Even at historical highs, the market showed little enthusiasm for buying upside options, continuously selling to reduce exposure during small price increases, resulting in reluctance to pay a premium for call options. Meanwhile, the market recognizes the potential danger below the price, with potentially volatile movements if the price breaks below the $99-101k support or risk asset sentiment changes.

• Kurtosis remained relatively flat last week, slightly declining. As people continue to sell wing strike prices and the market tries to support long positions at both middle and price-side strikes, they are willing to slightly sell both sides to mitigate Theta loss. Considering the current restrained price movement and the rapid increase in actual volatility (and implied volatility, skew) after breaking the range, we believe holding long wing positions is currently very worthwhile.

Good luck this week!