Written by: 0xWeilan
The cycle's giant wheel turns, pushing a market that was recently filled with fear and hesitation into a new phase, with trading rapidly escalating in this new emotional climate.
As we predicted in our October report (10.89% monthly increase, BTC may reach new highs after the chaos of the U.S. elections): the internal consolidation of the crypto market has been completed, and this month welcomes an external trigger point—on November 6, the U.S. presidential election concluded with the Republican candidate Trump, who holds a friendly stance towards Crypto, winning, leading BTC's price to set new highs and approach $100,000.
The resolution of this annual major event allows traders in various financial markets to gradually emerge from chaos and uncertainty, returning to a predetermined trading rhythm, with U.S. stocks resuming their upward trajectory. Expectations of 'Trump's economic policy' have become a major trading point, with Tesla, MicroStrategy, and others becoming the biggest gainers.
BTC suddenly surged at the end of October, breaking through multiple technical resistances such as the 'new high consolidation zone' and the 'upward trend line,' continuously setting new historical highs, peaking at $99,860, with a significant increase of 37.42% for the month.
With the trading market heating up, November saw a massive inflow of funds totaling $25.9 billion, making it the largest inflow month in the history of the Crypto market.
As BTC approaches the $100,000 mark, the continuous inflow of funds has finally triggered a sharp rise in Altcoins represented by ETH, leading to a broad market rally.
EMC Labs has comprehensively assessed that the second wave of the crypto market's 'upward phase' has already begun, and funds will gradually flow into Altcoins to create a broad market rally.
The high inflation that may be triggered by 'Trump's economic policy' and the conflict with the Fed's ongoing rate cuts represents the greatest uncertainty. However, this uncertainty is merely a minor discord in a larger certainty, insufficient to alter the trend of market operations.
Macroeconomic Finance: Trump's Economic Policy
'Trump's economic policy' mainly includes tax cuts and deregulation, protectionist trade policies, energy independence and traditional energy support, fiscal expansion and debt risks, immigration and labor policies, political and debt management, among others.
These economic policies, driven by the 'America First' spirit, will pose significant challenges to the existing global trade and financial order, leading to unpredictable conflicts and chaos. Even domestically in the U.S., aspects like economic growth, illegal immigration, and the financial system may create seemingly irreconcilable contradictions.
Repatriating illegal immigrants and raising tariffs may increase inflation, while federal rates remain high. An inflation rebound could hinder interest rate cuts. Without rate cuts, government fiscal expansion will undoubtedly face greater challenges, and the high debt levels will further burden the U.S. government.
The Federal Reserve, in a process of rate cuts and balance sheet reduction, also faces a dilemma. In November, the U.S. CPI showed a predictable rebound, while employment data and economic conditions remained good, indicating a significantly reduced necessity for rate cuts. Although the dot plot and the minutes from the Fed indicate that a 25 basis point rate cut in December is still likely, the rate-cutting process in 2025 is likely to slow down.
Powell hopes to maintain economic stability and a normalized inflation level with professionalism. However, Trump has made it clear that he will fulfill his campaign promises through reform and conflict—lowering corporate taxes and increasing import tariffs, providing more domestic jobs. The two positions are almost irreconcilable, and their contradictions have become public.
Despite significant uncertainties, traders in various markets have already taken positions and made decisions—betting 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 enterprises, recorded an 11.01% increase, reaching a historic high.
In terms of U.S. Treasuries, the long and short ends recorded yields of 4.177% and 4.160% respectively at the end of the month, both showing slight declines, indicating that the bearish risk on U.S. Treasuries has temporarily decreased.
The U.S. dollar index continued to rise, closing at 105.74 in November, an increase of 1.02% from the previous month, while the euro, renminbi, and yen all depreciated against the dollar. Looking ahead, global funds are optimistic about the U.S. financial market, and the trend of purchasing dollar-denominated assets continues.
In contrast, gold, which absorbs global risk-averse funds, fell 3.41% during the month, marking the largest monthly drop in 14 months. As we gradually emerge from the post-pandemic era, liquidity is becoming increasingly abundant, and global risk appetite is rising. Equity assets, particularly those represented by BTC in the Crypto space, are beneficiaries of this increase.
Crypto Assets: BTC Reaches Historic High, Altseason Could Start Anytime
In November, BTC opened at $70,198.02 and closed at $96,465.42, with a rise of 37.42% and a fluctuation of 47.12%, and trading volume effectively increased.
After returning to the '200-day moving average' and crossing the 'downward trend line' in November, BTC continues to achieve significant breakthroughs in technical indicators this month, breaking through the upper resistance of the 'new high consolidation zone' that had been stagnant for eight months and once again stepping onto the 'upward trend line' after four months.
BTC Daily Price Trend
On a monthly basis, BTC achieved three consecutive monthly increases with a sustained moderate increase in volume, showing a healthy upward trend.
BTC Monthly Price Trend
In previous reports, we have repeatedly emphasized that over 30% of BTC experienced address transfers in the new high consolidation zone from March to October of this year. This upward revaluation has repeatedly occurred in past cycles, becoming the internal structural support for future price increases.
However, the final price breakthrough requires external conditions to trigger it.
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 been stagnant for eight months.
Is BTC's 'Trump Rally' sustainable? EMC Labs believes that whether it's last year's proposal (the 21st Century Financial Innovation and Technology Act), this year's (U.S. Bitcoin Strategic Reserve Draft), or the recently passed (Bitcoin Rights Act) by the Pennsylvania House, all indicate that the U.S. adoption of Crypto is gradually shifting from 'allowing' to 'promoting.' The goal is to gain control over crypto assets and the blockchain industry (public chains, infrastructure, and decentralized applications) through laws and national strategies, ensuring the U.S. obtains a dominant advantage in this emerging race.
Therefore, in the coming years, support from U.S. policies and the adoption of Crypto by traditional institutions, including financial institutions and publicly traded companies, is expected to continue to rise. At no point in history has the blockchain industry and crypto assets received such significant acceptance and adoption.
Liquidity Surge: Two Major Channels Create Historic Records
Continuous inflows of funds are the material support for a bull market.
In November, a total of $25.9 billion flowed into the BTC Spot ETF and stablecoin channels, setting a record for the largest single-month fund inflow. The ETF channel accounted for $5.4 billion and the stablecoin channel $19.5 billion. In November, ETF fund inflows surpassed February, making it the month with the largest inflow.
Monthly Statistics of Fund Flows in the Crypto Market
Since October, with the U.S. election nearing its end, the first to initiate was the ETF channel funds. Since September, the inflow scale has gradually expanded, 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 an independent will to gradually control BTC's price trend, which has been fully reflected in the recent market conditions.
In contrast to the 'leading brother' that bears the heavy burden, the stablecoin channel funds appear somewhat late to the party. After entering November, the influx began to show a significant increase only as BTC's price continued to break through. However, the total inflow of stablecoin channel funds for the month reached $19.5 billion, far exceeding the ETF channel funds.
Daily Statistics of Fund Flows in the Crypto Market
On November 22, the day BTC attempted to break the $100,000 mark, on-site funds began to flow into ETH, which surged by 9.31% that day. In November, ETH's cumulative increase reached 47.05%, surpassing BTC, suggesting that the market is beginning to enter Altseason.
EMC Labs believes that after BTC breaks through the $100,000 mark, Altseason will gradually open. Once Altseason opens, the market will gradually show: 1. ETH breaking historical highs; 2. General market rally; 3. The main market trends gradually being identified.
Long-short Game: Liquidity Triggers a Second Wave of Selling
The cycle is a game of collecting and distributing chips by long and short hands within a spatiotemporal range.
Long positions accumulate chips during the descending, bottoming, and repairing phases, while continuously selling during the rising and transitioning phases until liquidity struggles to 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 a consolidation phase in March, it returned to a chip accumulation state. In November, as liquidity recovered, prices reached new highs, and long positions initiated the second large-scale sell-off, which is also the last major sell-off in this cycle.
15 Years of BTC Long Position Selling History
As of the end of September, the long positions held 14.22 million coins, and by the end of November, the sell-off positions reached 13.69 million coins, with a 'sell-off scale' of 530,000 coins over two months.
During the upward phase, the motivation for long positions to sell is the price increase brought about by liquidity, while the price increase is also a self-justifying process of the market, which will trigger more fund inflows.
The second sell-off by long positions has just taken place 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 capabilities.
EMC Labs believes that the fundamental reason for the price increase of BTC and the entire crypto market lies in the robust internal structure and the continuous rate cuts and significant increase in investor risk appetite in major global economies. Additionally, the substantial increase in adoption and expectations of U.S. national policies also provide great emotional and material momentum.
We believe these external factors will continue to provide support for the crypto market in the coming year. Therefore, after the crypto bull market resumes, it will continue to rise, with some setbacks in between, but the latter half of the upward period is bound to provide richer returns for long-term investors.
