Bitcoin Stabilizes: Benefiting from Capital Flows, Policies, and Macro Tailwinds
Bitcoin is once again approaching its historical high, supported by a return of investor attention and a favorable macro environment. In April, spot Bitcoin ETFs attracted nearly $3 billion in net inflows, followed by an additional $1.6 billion from May to date. Data from the U.S. Commodity Futures Trading Commission (CFTC) indicates that leveraged funds have not significantly increased their short positions, suggesting that most capital flows are directional bets rather than arbitrage trades.
On the policy front, relevant developments are heating up. New Hampshire has become the first U.S. state to enact a strategic Bitcoin reserve law, with another 19 states considering similar legislation. Meanwhile, Arizona is simultaneously advancing legislative processes in cryptocurrency custody and strategic reserves.
At the federal level, the Senate blocked the GENIUS Act, a stablecoin regulatory bill, but the crypto market remains unfazed, with market risk appetite still robust. Macro-economically, supportive signals are also emerging. Revisions to Trump’s tariff policy are viewed as growth-promoting measures, boosting the stock market and the dollar while suppressing the prices of gold and yen, thereby reducing recession probabilities. Market volatility has cooled, with the VIX index currently retreating to its average level over the past 12 months.
In short, Bitcoin is benefiting from three major factors: rising institutional demand, a favorable policy environment, and a warming macro landscape. In terms of positioning, investors are actively going long.
Bitcoin Transfers Volatility Dominance to Ethereum
The actual volatility of Bitcoin has risen by approximately 8 percentage points, breaking the $100,000 barrier again. Ethereum has been even more eye-catching, with its actual volatility soaring to 90% and its price jumping 30% within just two days. Bitcoin’s short-term implied volatility has slightly decreased, while Ethereum’s has surged by 20 volatility points due to drastic price fluctuations.
Bitcoin’s holding cost has returned to neutral, but Ethereum’s holding cost has turned deeply negative, severely impacting Gamma sellers. Bitcoin’s upward trend has only once broken the implied high (at the $100,000 mark), while Ethereum has achieved multiple upward breakthroughs. It appears Bitcoin has transferred momentum dominance to Ethereum, though whether this situation can be sustained remains to be seen.
Bitcoin Volatility Term Structure Flattens, Call Option Premiums Resurge
As the market rebounds, the skew curve has flattened, and call option premiums have rebounded. Bitcoin’s volatility skew remains around 2-3 volatility points across the term structure, indicating a bullish capital flow betting on price increases, although implied volatility levels remain relatively low.
Ethereum’s option volatility skew has shifted downwards, showing an overall mild bearish tendency (except at the short-term contract end). If Ethereum can maintain its recent gains and effectively break through the $2,800 mark, the market may see a resurgence in sustained buying of call options. At this stage, investors remain cautious.
In the long term, Ethereum still has a gap to close compared to Bitcoin.
Front-End Volatility Spread Widens Dramatically
ETH/BTC surged 33% over the past week and is currently testing the critical downward trend resistance at 0.025. As Ethereum has performed extremely well in realized volatility, its short-term volatility premium has surged to 35 volatility points.
Meanwhile, the long-term volatility spread remains around 15 volatility points, indicating limited reaction, supporting the view that the current level of long-term VEGA (volatility risk exposure) may be suitable for selling. Despite significant volatility in Ethereum, the volatility skew of short-term option contracts has further tilted towards bearish option premiums, suggesting that the options market has not fully acknowledged this upward trend.
This article is collaboratively republished from: PANews