BTC Volatility Weekly Review (August 4 - August 11)

Key Indicators (August 4, 16:00 HKT → August 11, 16:00 HKT) BTC/USD +5.9% ($114,800 → $121,600), ETH/USD +20.6% ($3,550 → $4,280)

Breakthrough of the upper edge of the flag: Last weekend, BTC strongly broke through the top of the flag formation, clearly preparing to retest the historical high (ATH). We maintain a bullish outlook, with a target range of $125–135k (potentially reaching $140k in extreme cases), and we believe this could be the cycle peak for this rally. Pullback risk: If the price stagnates and retracts here, it may enter an extended adjustment of the fourth wave, but the $112k support level is expected to hold firm. Once the upward extending pattern is confirmed, actual volatility is expected to rise in the next 3–6 months. Market Theme Risk assets rebound: The initial misjudgment of the market triggered by the U.S. non-farm payroll data (NFP) has been rectified as expectations for a Federal Reserve interest rate cut have been digested, leading to a healthy rebound in risk assets last week. U.S. corporate earnings remain robust, combined with the Fed's easing cycle, which is expected to support continued gains in the stock market. This week, the market is focused on U.S. CPI data; if the data is moderate or meets expectations, it will solidify interest rate cut pricing and push risk assets (especially high-beta AI sectors) further upward. Cryptocurrencies follow the rebound in U.S. stocks: After BTC held the critical support level at $112k, the crypto market rebounded in tandem with U.S. stocks/NASDAQ. ETH broke through strong resistance at $4k, briefly spiking to $4.3k over the weekend and stabilizing; BTC saw a late rally early Monday, breaking past $122k. With ETH's recent gains being substantial, funds may rotate back to BTC or SOL, and if risk sentiment does not reverse (especially if CPI confirms the rate cut expectations), BTC will find support. Industry good news: The Trump administration has begun to fulfill its promise to support the crypto industry by signing an executive order allowing U.S. 401K pension plans to purchase cryptocurrencies, and nominating BTC supporter Miran to the Federal Reserve Board. BTC ATM Implied Volatility

Actual volatility remains stable: Last week, actual volatility stayed between 30-32 vol, with Trump's policy boost pushing BTC back above the $116k pivot point. However, due to the low trading activity in the summer, implied volatility remains sluggish. Early Monday morning, spot prices rose 4% to $122.4k, briefly boosting the volatility market, but there was a lack of sustained follow-up. The term structure has become steeper: The holding costs for contracts expiring in September and October are significantly higher, reflecting market expectations that volatility will rebound after the end of summer at the end of August. Although contracts expiring in August are under pressure due to low actual volatility, CPI data and the Jackson Hole meeting may provide opportunities for volatility. BTC Skewness and Kurtosis

Skew changes: Despite the rise in spot prices, the short-term bearish option skew suddenly increased on Monday, possibly due to the closing of deep in-the-money call options. Demand for call options for September and beyond has re-emerged. Kurtosis spike: The kurtosis price surged unusually on Monday, diverging from the stable performance of ATM volatility, which also reflects the possibility of liquidation occurring in the market. The current kurtosis/ATM volatility ratio (0.2) is nearly double the historical average (0.1), indicating a higher premium pricing for extreme volatility in the market, providing opportunities to leverage the underlying low volatility foundation to set up gamma. Wishing everyone a successful trading week!