Written by 0xWeilan
The wheel of the cycle turns, pushing the market, which was full of fear and hesitation not long ago, into a new stage, and trading suddenly heats up in this mood.
As predicted in our October report (a monthly increase of 10.89%, BTC may hit a new high after the chaos of the US election): the internal consolidation of the crypto market has been completed, and this month has ushered in an external detonation point - the US presidential election ended on November 6, and the Republican candidate Trump, who was friendly to Crypto, won. The price of BTC continued to hit new highs, approaching $100,000.
The conclusion of this year's major event has allowed traders in various financial markets to gradually get out of chaos and uncertainty and return to the established trading rhythm, and US stocks have resumed their rise. "Trump's economic policy" expectations have become the main trading point, and Tesla, MicroStrategy and other stocks have become the targets with the largest increase.
BTC suddenly activated amidst a downturn at the end of October, overcoming multiple technical resistances such as the 'new high consolidation zone' and 'ascending trend line', continuously setting new historical highs, peaking at $99,860, with a significant monthly increase of 37.42%.
As trading conditions heated up, November saw a massive influx of capital, with a total inflow of $25.9 billion for the entire month, making it the largest inflow month in the history of the Crypto market.
Against the backdrop of BTC approaching the $100,000 mark, continued capital inflows have finally triggered a sharp rise in Altcoins represented by ETH, leading to a broad market rally.
EMC Labs integrates multidimensional judgments, and the second wave of the 'ascending phase' in this cycle of the crypto market has already started, with capital gradually flowing into Altcoin to form a broad market rally.
The high inflation that may be triggered by the 'Trump economic policy' and the conflict with the Federal Reserve's ongoing interest rate reduction becomes the greatest uncertainty. However, this uncertainty is merely a minor discord in the larger certainty, insufficient to change the trend of the market's operation.
Macroeconomic Finance: Trump Economic Policy
The 'Trump economic policy' mainly includes tax cuts and deregulation, protectionist trade policies, energy independence and support for traditional energy, fiscal expansion and debt risks, immigration and labor policies, as well as political and debt management.
These economic policies, guided by the spirit of 'America First', will pose significant challenges to the existing global trade and financial order, leading to unpredictable conflicts and chaos. Even within the United States, aspects such as economic growth, illegal immigration, and the financial system may create seemingly irreconcilable contradictions.
Repatriating illegal immigrants and raising tariffs may push up inflation, while the federal interest rate remains high. The rebound in inflation makes interest rate cuts likely more difficult. Without rate cuts, the difficulty of government fiscal expansion will undoubtedly increase, and the high debt scale will further burden the US government.
The Federal Reserve, which is in the process of interest rate cuts and balance sheet reduction, also faces dilemmas. In November, the US CPI showed an expected rebound, while employment data and economic conditions remained good, indicating that the necessity for interest rate cuts has greatly diminished. Although the dot plot and the meeting minutes released by the Federal Reserve indicate that a 25 basis point rate cut in December is still a high-probability event, the process of rate cuts in 2025 is likely to slow down.
Powell hopes to uphold professionalism, maintain economic stability, and normalize inflation levels. However, Trump has made it clear that he will fulfill his campaign promises through reform and conflict — cutting corporate taxes and increasing import tariffs to provide more domestic jobs. The two sides' positions are almost irreconcilable, and their contradictions have become public.
Although there is great uncertainty, traders in various markets have already taken sides and made decisions — to bet on the US economy, with the most optimistic outcome being 'high inflation and high growth'.
In November, the Nasdaq, Dow Jones, and S&P 500 recorded increases of 6.21%, 7.54%, and 5.74% respectively, while the RUT2000, which represents small and medium-sized enterprises, recorded an increase of 11.01%, reaching a historical high.
In terms of US Treasury bonds, the long and short yields at the end of the month were 4.177% and 4.160%, respectively, both showing slight decreases, indicating that the bearish risk for US Treasury bonds has temporarily decreased.
The US dollar index continues to climb, closing at 105.74 in November, an increase of 1.02% from the previous month, while the Euro, Renminbi, and Yen have all depreciated against the dollar. In the future, global funds remain optimistic about the US financial market, and the trend of buying dollar-denominated assets continues.
Correspondingly, gold, which serves as a refuge for global funds, fell 3.41% in the month, recording the largest monthly decline in 14 months. As we gradually emerge from the post-pandemic era, liquidity is becoming increasingly abundant, and global risk appetite is on the rise. Equity assets, along with Crypto represented by BTC, are beneficiaries of this increase.
Crypto Assets: BTC Historical High, Altseason Ready to Start
In November, BTC opened at $70,198.02 and closed at $96,465.42, with an increase of 37.42%, a volatility of 47.12%, and a significant increase in trading volume.
After returning to the '200-day moving average' and crossing the 'descending trend line' in November, BTC continued to achieve significant breakthroughs in technical indicators this month, breaking through the upper resistance of the 'new high consolidation zone' that had been stuck for eight months, and once again stepping onto the 'ascending trend line' after four months.
BTC Daily Price Trends
On the monthly line, BTC achieved three consecutive months of increases with continuously moderate volume expansion, showing a healthy upward trend.
BTC Monthly Price Trends
In previous research reports, we have repeatedly emphasized that from March to October of this year, over 30% of BTC underwent address transfers in the new high consolidation zone. This upward repricing has repeatedly occurred in past cycles, becoming internal structural support for future price increases.
The ultimate breakthrough in price requires the stimulation of external conditions.
The biggest global event in November was Trump's re-election as President of the United States, and his previous enthusiasm for Crypto and 'commitments' during the campaign became the emotional catalyst for BTC to break through the 'new high consolidation zone' that had lingered for eight months.
Is BTC's 'Trump market' sustainable? EMC Labs believes that whether it is last year's proposed (21st Century Financial Innovation and Technology Act), this year's (US Bitcoin Strategic Reserve Draft), or even the recently passed (Bitcoin Rights Act) by the Pennsylvania House of Representatives, all indicate that the US's adoption of Crypto is gradually shifting from 'allowing' to 'promoting'. Its goal is to gain control over crypto assets represented by BTC and the blockchain industry (public chains, infrastructure, and decentralized application projects) through legal regulations and national strategies, ensuring the US maintains a dominant advantage in this emerging track.
Therefore, in the coming years, support from US policies and the adoption of Crypto by traditional institutions, including financial institutions and listed companies, can be expected to continue to rise. At no point in history has the blockchain industry and crypto assets ever received such a strong acceptance and adoption.
Surging Liquidity: Two Major Channels Resonating to Create Historical Records
Continuous capital inflows are the material support for a bull market.
In November, BTC Spot ETF and stablecoin channels collectively saw inflows of $25.9 billion, setting a record for the largest single-month inflow. Among them, the ETF channel contributed $5.4 billion, and the stablecoin channel $19.5 billion. In November, the inflow scale of the ETF exceeded that of February, becoming the largest inflow month.
Monthly statistics on capital flows in the crypto market
Since October, as the US election nears its conclusion, the first channel to activate was the ETF channel. This channel's inflow scale has gradually expanded since September, with inflows of $1.2 billion, $5.4 billion, and $6.4 billion from September to November. We previously emphasized that the funds in the ETF channel have independent intentions and will gradually gain control over BTC's price movements. This has been fully reflected in the recent market conditions.
Compared to the 'leading brother' who takes on heavy responsibilities, the stablecoin channel funds appear slightly behind the curve. After entering November, as BTC prices continued to break through, a surge of inflows began to emerge. However, the inflow scale of stablecoin channels reached $19.5 billion for the entire month, far exceeding that of the ETF channel.
Daily statistics on capital flows in the crypto market
On November 22, when BTC attempted to break through the $100,000 mark, capital in the market began to activate ETH, with an increase of 9.31% on that day. In November, ETH's cumulative increase reached 47.05%, surpassing BTC, and the market seems to be opening up Altseason.
EMC Labs believes that after BTC breaks the $100,000 mark, the Altseason will gradually open up. Once Altseason opens, the market will gradually show: 1. ETH breaks historical highs; 2. The market rallies broadly; 3. The main market trends gradually become identifiable.
Long-Short Game: Liquidity Triggers Second Wave of Selling
The cycle is a game of collecting and distributing chips by long and short hands within a temporal and spatial range.
Long-term holders accumulate chips during the downward, bottoming, and recovery phases, while they continuously sell during the ascending and transitioning phases, until liquidity can no longer absorb the selling pressure, leading to a market reversal.
Since January 2024, the long-term holders have initiated the first wave of large-scale selling. After the market entered a consolidation phase in March, they returned to a state of accumulation. In November, as liquidity recovered, prices reached new highs, and long-term holders initiated the second wave of selling, which is also the last large-scale selling of this cycle.
15-Year History of BTC Long-Term Selling
As of the end of September, long-term holders held 14.22 million coins, and by the end of November, the selling holding had reached 13.69 million coins, with a 'selling scale' of 530,000 coins over the two months.
In the ascending phase, the motivation for long-term holders to sell is the price increase brought about by liquidity, while the price rise is also a self-affirming process for the market, triggering more capital inflows.
The second wave of selling by long-term holders has just been underway for two months, and with the continued increase in liquidity, it is expected to continue in the first half of 2025.
Conclusion
In November, the cycle once again demonstrated its powerful market adjustment ability.
EMC Labs believes that the fundamental reason for the price increase of BTC and the entire crypto market lies in the fact that, based on the completion of internal structural consolidation, the continuous interest rate cuts by major global economies and the significant increase in investor risk appetite are the primary causes. Additionally, the increase in adoption and expectations of US national policy provide substantial emotional and material momentum.
We believe that these external factors will continue to provide momentum support for the crypto market in the coming year. Therefore, after the resumption of the crypto bull market, it will continue to rise, with setbacks along the way, but the latter half of the upward period is destined to provide richer returns for long-term investors.
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EMC Labs was founded in April 2023 by crypto asset investors and data scientists. It focuses on blockchain industry research and secondary market investment in Crypto, with industry foresight, insights, and data mining as core competitiveness, aiming to participate in the thriving blockchain industry through research and investment, promoting blockchain and crypto assets to bring benefits to humanity.
