Original title: (EMC Labs November Report: BTC Approaching $100,000, Surge of Liquidity Reignites Crypto Bull Market)
Original author: 0xWeilan, EMC Labs
The cyclical wheel turns, pushing the market, which was once filled with fear and hesitation, into a new phase, as trading heats up dramatically.
As we predicted in our October report (monthly increase of 10.89%, after the chaos of the U.S. election, BTC may set a new high): the internal organization of the crypto market has been completed, and this month welcomed the external trigger point—on November 6, after the U.S. presidential election concluded, Trump, who holds a friendly attitude toward Crypto, won, causing BTC prices to continuously set new highs, approaching $100,000.
The conclusion of this major annual event has allowed traders in various financial markets to gradually emerge from chaos and uncertainty and return to a predetermined trading rhythm, with U.S. stocks resuming their upward trend. 'Trump's economic policy' expectations have become the main trading point, with Tesla, MicroStrategy, and others becoming the biggest gainers.
BTC suddenly surged in the late October slump, breaking through multiple technical resistances such as the 'new high consolidation zone' and 'uptrend line,' continuously setting new historical highs, peaking at $99,860, and recording a substantial increase of 37.42% for the month.
With the trading market heating up, November saw a massive inflow of funds, with a total inflow of $25.9 billion for the month, making it the largest inflow month in the history of the Crypto market.
Against the backdrop of BTC approaching the $100,000 mark, the continuous inflow of funds finally triggered a sharp rise in Altcoins represented by ETH, leading to a broad rally.
EMC Labs integrates multidimensional judgments, stating that the second wave of the 'uptrend' in the crypto market has started. Subsequently, funds within the market will gradually flow into Altcoins, leading to a broad-based rally.
The potential high inflation triggered by 'Trump's economic policy' conflicts with the ongoing interest rate cuts by the Federal Reserve, creating the greatest uncertainty. However, this uncertainty is merely a slight discord in the grand scheme, insufficient to change the market's operational trend.
Macroeconomic finance: Trump's economic policy.
Trump's economic policy primarily includes tax cuts, deregulation, protectionist trade policies, energy independence, support for traditional energy, fiscal expansion, debt risks, immigration and labor policies, and political and debt management.
These economic policies under the 'America First' spirit will pose great challenges to the existing global trade and financial order, leading to unpredictable conflicts and chaos. Even within the U.S., aspects such as economic growth, illegal immigration, and the financial system may create seemingly irreconcilable contradictions.
The repatriation of illegal immigrants and the increase in tariffs may push up inflation, while the federal interest rate remains high. The inflation rebound may hinder rate cuts. Without rate cuts, the government's fiscal expansion will undoubtedly become more difficult, and the high debt levels will further burden the U.S. government.
The Federal Reserve, which is in the process of interest rate cuts and balance sheet reduction, also faces a dilemma. In November, the U.S. CPI showed a rebound as expected, while employment data and economic conditions remain good, indicating that the necessity for interest rate cuts has diminished significantly. 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 highly probable, the process of rate cuts in 2025 is likely to slow down.
Powell hopes to uphold professionalism, maintain economic stability, and normalize the inflation level. However, Trump clearly aims to fulfill his campaign promises through reforms and conflicts—reducing corporate taxes and increasing import tariffs, while providing more domestic jobs. The stances of both are almost irreconcilable, and their contradictions have become public.
Despite significant uncertainties, traders across various markets have already taken sides and made decisions—bullish on the U.S. 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 businesses, recorded an increase of 11.01%, setting a historical high.
Regarding U.S. Treasury bonds, the long-term and short-term yields ended the month at 4.177% and 4.160%, respectively, both showing slight declines, indicating that the bearish risk for U.S. Treasuries has temporarily decreased.
The U.S. Dollar Index continued to rise, closing at 105.74 in November, up 1.02% from the previous month, while the exchange rates of the euro, renminbi, and yen against the dollar all depreciated. In the future, global funds are optimistic about the U.S. financial market, and the trend of purchasing dollar-denominated assets continues.
Correspondingly, gold, which absorbs global risk-averse funds, fell 3.41% in the month, recording its 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, as well as Crypto represented by BTC, are the beneficiaries of this increase.
Crypto assets: BTC hits a historical high, and Altseason could start at any moment.
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 'downtrend 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 'uptrend line' after four months.
BTC daily price trend.
On the monthly chart, BTC achieved three consecutive months of increases with steadily increasing volume, presenting a healthy upward trend.
BTC monthly price trend.
In previous research reports, we have repeatedly emphasized that more than 30% of BTC in the new high consolidation zone from March to October this year underwent address transfers, and this upward repricing has repeatedly occurred in past cycles, becoming internal structural support for future price increases.
The final breakthrough of the price requires external conditions to trigger it.
The largest global event in November was Trump's re-election as President of the United States, and his previous enthusiasm for Crypto, along with his 'promises' during the campaign, became the emotional catalyst for BTC to break through the 'new high consolidation zone' that had been stagnant for eight months.
Is BTC's 'Trump rally' sustainable? EMC Labs believes that whether it's last year's proposal (21st Century Financial Innovation and Technology Act), this year's (U.S. Bitcoin Strategic Reserve Draft), or the recently passed (Bitcoin Rights Act) in the Pennsylvania House of Representatives, all indicate that the U.S. is gradually shifting from 'allowing' to 'promoting' the adoption of Crypto. The 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 U.S. gains a dominant advantage in this emerging track.
Therefore, in the coming years, support from U.S. policies and the continued adoption of Crypto by traditional institutions, including financial institutions and publicly traded companies, can be expected to increase. At no point in history have the blockchain industry and crypto assets been accepted and adopted with such significant force.
Surge of liquidity: Two major channels resonate to create historical records.
Continuous inflow of funds is the material support for the bull market.
In November, a total of $25.9 billion flowed into BTC Spot ETF and stablecoin large channels, setting a record for the largest single-month inflow ever. Among them, the ETF channel accounted for $5.4 billion, and the stablecoin channel accounted for $19.5 billion. In November, the inflow scale of ETF funds surpassed that of February, becoming the month with the largest inflow.
Monthly statistics of capital flow in the crypto market.
Since October, as the U.S. election approached its conclusion, the ETF channel funds were the first to initiate. This channel's funds began to gradually increase 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 from the ETF channel have independent intentions and will gradually control BTC's price movements. This has been fully reflected in the recent market.
Compared to the 'leading big brother' taking on heavy responsibilities, the stablecoin channel's funds appear to be slightly slow to react. After entering November, the influx began to show a significant increase only as BTC prices continuously broke through. However, the total inflow of stablecoin channel funds for the month reached $19.5 billion, far exceeding ETF channel funds.
Daily statistics of capital flow in the crypto market.
On November 22, when BTC approached the $100,000 mark, funds in the market began to activate ETH, which saw a daily increase of 9.31%. In November, ETH's cumulative increase reached 47.05%, surpassing BTC, and the market seems to be opening Altseason.
EMC Labs believes that after BTC breaks through the $100,000 barrier, Altseason will gradually open. After Altseason opens, the market will gradually present: 1. ETH breaking through historical highs; 2. A broad market rally; 3. The main market trends gradually being recognized.
Long-short game: Liquidity spurs the second wave of selling.
Cycles are a game of collecting and distributing chips by long and short players within the temporal and spatial range.
Long positions collect chips during the downtrend, bottoming, and recovery phases, while engaging in continuous selling during the uptrend and transition phases until liquidity can no longer absorb the selling pressure, leading to a market reversal.
Since January 2024, the long positions have initiated the first large-scale sell-off. After the market entered consolidation in March, it returned to a state of accumulating chips. In November, as liquidity recovered, prices reached new highs, and the long positions have initiated the second round of selling, which will be the last large-scale sell-off of this cycle.
15 Years of BTC Long Position Selling History
As of the end of September, long positions held 14.22 million BTC, and by the end of November, the selling positions reached a scale of 13.69 million BTC, with the 'selling scale' over the two months totaling 530,000 BTC.
During the uptrend, the motivation for long positions to sell is the price increase brought on by liquidity, while the price increase simultaneously serves as a self-fulfilling process for the market, which will trigger more fund inflows.
The second round of selling by long positions has just occurred for two months, and with the continued increase in liquidity, it is expected to continue into the first half of 2025.
Conclusion
In November, the cycle once again demonstrated its powerful market adjustment capability.
EMC Labs recognizes that the fundamental reason for the price increase of BTC and the entire crypto market lies in the sustained interest rate cuts by major global economies and a significant increase in investor risk appetite based on a well-structured internal organization. Additionally, the significant increase in adoption and expectations of U.S. national policy provide substantial emotional and material impetus.
We believe that these external factors will continue to provide support for the crypto market in the coming year. Therefore, after the crypto bull market restarts, it will continue to rise, with some setbacks along the way, but the latter half of the uptrend is destined to provide richer returns for long-term investors.
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