The week from May 5 to May 12 marked a pivotal moment in Bitcoin’s price trajectory, characterized by a strong upward move and surprising stability in volatility metrics. Despite a notable 10.7% increase in BTC’s value and a staggering 39.2% rally in ETH, the market remained remarkably orderly — a sign of maturing dynamics and structural shifts in trader behavior. This review dives into the key price movements, volatility trends, market sentiment, and forward-looking expectations shaping the current crypto landscape.
Price Performance and Market Momentum
Between May 5 and May 12 (4:00 PM Hong Kong time), Bitcoin surged from $94,700 to $104,800 — a 10.7% weekly gain. Ethereum outperformed even more dramatically, climbing from $1,825 to $2,540, marking a 39.2% rise. This rally confirmed the breakout above the psychologically significant $100,000 resistance level, pushing prices into a new range of $101,000–$110,000.
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What made this move particularly interesting was its lack of turbulence. Despite the magnitude of the price increase, actual volatility remained low. This suggests that upward momentum was met with consistent selling pressure — primarily from profit-taking and delta-hedging activities by large holders and market makers with long gamma positions. These dynamics helped stabilize price action, preventing sharp spikes or corrections.
Over the past month, BTC has climbed nearly 40% from its $74,000–$75,000 support zone. This rapid ascent signals that we may be entering the final phase of the bullish cycle that began in September of the previous year. Looking ahead, we expect consolidation in the $92,000–$106,000 range over the coming weeks, although further upside extension remains possible.
Our long-term outlook remains bullish: we anticipate BTC reaching $115,000–$125,000 within the next few months to quarters. Technically speaking, given the strength of this rally, a move toward $130,000–$135,000 cannot be ruled out if momentum sustains.
Broader Market Themes and External Influences
While crypto markets surged, traditional financial markets showed resilience despite cautious commentary from the Federal Reserve. The Fed reiterated it is “not急于 cutting rates,” yet market participants continue to price in 2–3 rate cuts over the next 12 months. This optimism has helped stabilize equities.
Geopolitical trade developments also played a role. Markets reacted positively to news of reduced tariffs on Chinese imports — an adjustment described as a 115% reduction — following a week of negotiations. Additionally, a U.S.-UK trade agreement was announced over the weekend, further boosting investor confidence.
As a result, equity markets have fully recovered from earlier tariff-driven selloffs and even reversed some pricing related to fears of U.S. economic slowdown. The S&P 500 has nearly returned to its年初 levels, reflecting renewed risk appetite.
Altcoin Resurgence and Bitcoin's Dominance
The breakout above $100,000 in Bitcoin, combined with positive sentiment in equities, reignited interest in altcoins. Ethereum led the charge with its near-40% weekly gain — a clear demonstration of its role as a bellwether for broader altcoin strength.
This surge triggered massive liquidations of short positions across derivatives markets, especially on structured products and leveraged trades. However, unlike previous cycles where altcoin rallies signaled a rotation away from Bitcoin, this time the dominance structure held firm.
Bitcoin ETFs continued to see steady inflows, indicating persistent institutional demand. In contrast, Ethereum saw less ETF-driven activity. This suggests that while altcoins are benefiting from renewed speculative energy, the core narrative remains anchored in Bitcoin’s price leadership.
In short: this altcoin rally appears more like a short-term "shakeout" than a fundamental shift in market leadership.
BTC Implied Volatility: Calm Amid the Storm
One of the most striking observations from the week was the behavior of implied volatility (IV). Despite BTC approaching $106,000 and decisively breaking through $100,000, IV failed to rise significantly.
Actual volatility remained subdued throughout the week, with high-frequency realized volatility hovering around 37. This disconnect between price movement and volatility highlights limited speculative demand for options. Most buying interest came from tactical bull call spreads, while both wings of the options market faced persistent selling pressure.
Traders used covered call strategies at higher price levels to reduce delta exposure, while others sold put options to collect premium income — a sign of confidence in downside support.
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Looking forward, unless a major catalyst triggers a sharp breakout or sell-off, we expect implied volatility to continue declining as prices stabilize. The term structure is already steep, with June and July IV rolling down by 1–1.5 points per week. This environment makes holding long-dated volatility positions challenging — though it’s worth noting that absolute IV levels are still relatively low.
Skew and Kurtosis: Signals from Options Markets
Skew, which measures the premium difference between puts and calls, turned sharply positive during the initial breach of $100,000. Traders feared an explosive breakout above the key resistance zone. However, as orderly price action unfolded — supported by on-chain selling and perpetual contract liquidations — sentiment normalized.
Increased writing of out-of-the-money call options pulled skew back toward neutral by week’s end. With downside protection seemingly intact and upside momentum controlled, extreme skew faded.
Kurtosis, reflecting tail risk and market uncertainty, remained suppressed due to sustained selling pressure on both call and put wings. Most directional bets were placed via structured spreads rather than outright options purchases — leading to a net sale of kurtosis across expiries.
Given that the $94,000–$106,000 range has acted as a low-volatility corridor (similar to patterns seen in February and two weeks prior), we believe there is value in positioning for moves outside this range. From a relative pricing perspective, kurtosis remains underpriced — suggesting potential opportunities for convexity-focused strategies.
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Frequently Asked Questions (FAQ)
Q: Why did Bitcoin’s implied volatility not rise despite a 10%+ price gain?
A: Implied volatility reflects expectations of future price swings, not past moves. The orderly nature of BTC’s rally — supported by hedging flows and profit-taking — reduced fear of sharp reversals. Additionally, limited speculative demand for options kept IV flat.
Q: Is the altcoin rally sustainable?
A: While Ethereum’s 39% weekly gain shows strong momentum, it was largely driven by short-covering and leveraged positions. With no major shift in on-chain fundamentals or ETF inflows outside BTC, this appears to be a short-term reactivation rather than a structural rotation.
Q: What factors could trigger higher volatility in Bitcoin?
A: Major catalysts include macroeconomic data (e.g., CPI, employment reports), regulatory decisions on spot ETH ETFs, geopolitical shocks, or unexpected large-scale whale movements. Absent these, low volatility is likely to persist.
Q: How should traders position in a low-volatility environment?
A: Consider selling premium via credit spreads or iron condors when IV is expected to decline. Alternatively, buying convexity (e.g., strangles) at low IV can offer asymmetric payoff if volatility expands.
Q: What is the significance of gamma in Bitcoin price stability?
A: Long gamma positions (like market makers holding options) require buying low and selling high to hedge — which dampens volatility. When large players hold long gamma, it contributes to smoother price action during rallies.
Q: Where is Bitcoin headed next?
A: We expect consolidation between $92,000 and $106,000 in the near term. However, our base case targets $115,000–$125,000 over the coming months, with potential for $130,000+ if momentum continues.
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