On-chain data shows that the Bitcoin reserves at major global exchanges are rapidly declining, resulting in a further shrinkage of market supply. Long-term holders are initiating a 'HODL' mode, firmly holding onto their Bitcoin, becoming an important force driving the price surge.
The Bitcoin reserves at exchanges have dropped to historical lows, indicating that the quantity of Bitcoin available for purchase is rapidly depleting, and supply pressure is soaring. This situation sharply contrasts with the late summer of this year when a large amount of Bitcoin flooded into exchanges, temporarily replenishing reserves. However, the market has not seen a similar 'blood replenishment' phenomenon, and the issue of Bitcoin supply shortage is becoming increasingly severe.
Because the vast majority of long-term investors will transfer cryptocurrencies to cold wallets for proper storage when their beliefs are high, in order to facilitate long-term holding.
The market generally believes that when investors withdraw large amounts of Bitcoin from exchanges, it also means a significant removal of supply from the open market, leading to tighter supply and increased buying pressure. Therefore, the phenomenon of large amounts of funds flowing out of exchanges is often viewed as a 'bullish indicator.'
The recent supply shortage of Bitcoin coincides with multiple favorable factors, including improvements in the global policy environment and increasing investor confidence in cryptocurrencies, indicating that market conditions may continue to improve next year.
So far, only three major exchanges, Bitfinex, Binance, and Coinbase, have Bitcoin reserves that can meet buyer demand, while smaller exchanges are facing increasing liquidity challenges, which may further exacerbate price volatility.
At the same time, institutional investors' demand for Bitcoin financial products (such as ETFs) continues to grow, further exacerbating market supply pressure. As the demand from retail and institutional investors heats up simultaneously, the Bitcoin supply shortage will further push up the price, reaching new historical peaks.
The second wave of the crypto market's 'rising phase' in this cycle has already started, and funds will gradually flow into Altcoins forming a broad rally.
The high inflation that may be triggered by the 'Trump economic policy' and the conflict with the Federal Reserve's ongoing rate cuts has become the largest uncertainty. However, this uncertainty is just a slight discord within a larger certainty, insufficient to change the market's operational trend.
The Federal Reserve, which is in the process of rate cuts and balance sheet reduction, is also facing a dilemma. In November, the U.S. CPI experienced a rebound as expected, while employment data and economic conditions remain good, which means the necessity for rate cuts has significantly diminished. Although the dot plot and the Federal Reserve's published meeting minutes indicate that a 25 basis point rate cut in December is still a high probability event, the rate cut process in 2025 is likely to slow down.
Although there is great uncertainty, traders in various markets have already taken positions 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 enterprises, recorded an increase of 11.01%, setting a new historical high.
In terms of U.S. Treasury bonds, at the end of the month, long-term and short-term yields were 4.177% and 4.160%, respectively, both showing a slight decline, indicating that bearish risks for U.S. Treasuries have temporarily eased.
The U.S. dollar index continues to rise, 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 are optimistic about the U.S. financial market, and the trend of buying dollar-denominated assets continues.
Correspondingly, gold, which has been receiving global safe-haven funds, fell 3.41% within the month, recording the largest monthly decline in 14 months. As we gradually move out of the post-pandemic era, liquidity is increasingly abundant, and global risk appetite is on the rise. Equity assets and cryptocurrencies, represented by BTC, are beneficiaries of this increase.
BTC hits a new historical high, Altseason could start at any time.
In November, BTC opened at $70,198.02 and closed at $96,465.42, with an increase of 37.42%, a fluctuation 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 landmark breakthroughs in technical indicators this month, breaking through the upper resistance of the 'new high consolidation zone' that had been in place for eight months and once again stepping onto the 'uptrend line' after four months.
The final breakthrough in price requires the stimulation of external conditions. Continuous capital inflow is the material support for a bull market. After BTC breaks through the $100,000 mark, Altseason will gradually unfold. Once Altseason opens, the market will gradually show: 1. ETH breaking historical highs; 2. Market-wide rally; 3. The main line of market trends gradually being recognized.
Long-term holders collect positions during the decline, bottoming, and recovery phases, while continuously selling during the rising and transition phases until liquidity can no longer absorb the selling pressure, leading to a market reversal.
Since this cycle began in January 2024, long-term holders initiated the first wave of large-scale selling. After the market entered consolidation in March, it returned to a state of position accumulation. In November, as liquidity returned, prices hit new highs, and long-term holders initiated the second wave of selling, which is also the last large-scale sell-off of this cycle.
The fundamental reason for the rising prices of BTC and the entire crypto market lies in the robust internal structural adjustments, alongside the continuous rate cuts by major global economies and a significant increase in investor risk appetite. Furthermore, the substantial improvement in adoption rates and expectations for U.S. national policies also provide great 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 restart of the crypto bull market, it will continue to rise. There will still be twists and turns in the middle, but the latter half of the rising period is destined to provide richer returns for long-term investors.