The information, opinions, and judgments regarding markets, projects, and currencies mentioned in this report are for reference only and do not constitute any investment advice.
The cycle's giant wheel turns, pushing a market that was recently filled with fear and hesitation into a new phase, with trading suddenly heating up.
As we predicted in our October report (monthly increase of 10.89%, BTC may reach new highs after the chaos of the U.S. election): the internal consolidation of the crypto market has completed, and this month welcomed an external ignition point—the conclusion of the U.S. presidential election on November 6, where the Republican candidate Trump, who holds a friendly attitude towards Crypto, won, leading to continuous new highs in BTC prices, nearing $100,000.
The resolution of this year's major event has allowed traders in various financial markets to gradually emerge from confusion and uncertainty, returning to an established trading rhythm, with U.S. stocks resuming their upward trend. Expectations for 'Trump's economic policy' have become the main trading point, with Tesla, MicroStrategy, and others being the top performers.
BTC suddenly surged at the end of October, breaking through multiple technical resistances such as the 'new high consolidation zone' and 'upward trend line', continuously setting new historical highs, peaking at $99,860, with a significant increase of 37.42% for the month.
With the warming of trading conditions, November saw a massive inflow of capital, recording $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 capital inflow finally triggered a sharp rise in Altcoins represented by ETH, leading to a broad market rally.
EMC Labs comprehensively judges that the second wave of the current crypto market 'upward phase' has been initiated, and capital will gradually flow into Altcoins, forming a broad market rally.
The potential high inflation that 'Trump's economic policy' may trigger, along with the conflict with the Federal Reserve's ongoing rate-cutting rhythm, has become the greatest uncertainty. However, this uncertainty is merely a minor discord within a larger certainty, insufficient to change 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 support for traditional energy, fiscal expansion and debt risk, immigration and labor policies, and political and debt management.
These economic policies under the 'America First' spirit will pose a tremendous challenge 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.
Deporting illegal immigrants and raising tariffs may push inflation higher, while federal interest rates remain high, leading to a rebound in inflation and potential obstacles to rate cuts. Without rate cuts, the difficulty of government fiscal expansion will undoubtedly increase, with high debt levels putting immense pressure on the U.S. government.
The Federal Reserve, which is in the process of rate cuts and balance sheet reduction, is also facing dilemmas. In November, U.S. CPI experienced an anticipated rebound, while employment data and economic conditions remained good, indicating that the necessity for rate cuts has greatly diminished. Although the dot plot and the Federal Reserve's meeting minutes indicate that a 25 basis point rate cut in December is still a high probability event, the rate-cutting process in 2025 is likely to slow down.
Powell hopes to uphold professionalism, maintain economic stability, and normalize inflation levels. However, Trump has clearly stated that he will fulfill campaign promises through reforms and conflicts—reducing corporate taxes and increasing import tariffs, providing more domestic employment. The positions of the two are almost irreconcilable, and their contradictions have become public.
Despite significant uncertainties, traders across various markets have started to align and make 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 and medium-sized enterprises, recorded an increase of 11.01%, reaching a historical high.
In the U.S. Treasury market, the long and short-end yields at the end of the month were 4.177% and 4.160%, showing a slight decline, indicating that bearish risks for U.S. Treasuries have temporarily decreased.
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. Looking ahead, global capital is optimistic about the U.S. financial market, and the trend of buying dollar-denominated assets continues.
In contrast, gold, which absorbs global risk-averse funds, fell by 3.41% during the month, recording the largest monthly decline in 14 months. As we gradually emerge from the post-pandemic era, liquidity is increasingly abundant, and the global risk appetite is rising. Equity assets, particularly those represented by BTC, are beneficiaries of this rising trend.
Crypto assets: BTC historical high, Altseason ready to 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 volatility of 47.12%, and a significant increase in trading volume.
After returning to the '200-day moving average' and breaking through the 'downward trend line' in November, BTC has continued 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 gains, with trading volume continuing to expand moderately, demonstrating a positive upward trend.
BTC monthly price trend
In previous research reports, we emphasized that more than 30% of BTC experienced address transfers in the new high consolidation zone from March to October this year. This upward repricing has repeatedly occurred in past cycles and has become internal structural support for future price increases.
However, the final breakthrough in price 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 the 'promises' made during the campaign became the emotional catalyst for BTC's breakthrough from the 'new high consolidation zone' that had been stagnating for eight months.
Is BTC's 'Trump rally' sustainable? EMC Labs believes that whether it is 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 Bill) by the Pennsylvania House, they all indicate that the U.S. adoption of Crypto is gradually shifting from 'allowing' to 'promoting', aiming to gain control over crypto assets and the blockchain industry (public chains, infrastructure, and decentralized application projects) through legal regulations and national strategies, ensuring that the U.S. gains a dominant advantage in this emerging track.
Therefore, in the coming years, support from U.S. policies and the adoption of Crypto by traditional institutions, including financial institutions and publicly listed companies, can be expected to continue to rise. At no point in history has the blockchain industry and crypto assets received such a strong level of acceptance and adoption.
Liquidity surge: Two channels resonate to create historical records
Sustained capital inflow is the material support for a bull market.
In November, a total of $25.9 billion flowed into BTC Spot ETFs and stablecoin channels, setting a record for the largest single-month capital inflow ever. Among these, the ETF channel accounted for $5.4 billion, and the stablecoin channel accounted for $19.5 billion. In November, the capital inflow from ETFs exceeded that of February, becoming the largest inflow month.
Monthly statistics on capital flow in the crypto market
Since October, with the U.S. elections nearing their conclusion, the first to kick off 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 possess independent will and will gradually take control of BTC's price movements. This has been fully reflected in the recent market trends.
Compared to the 'leading brother' who takes on heavy responsibilities, the capital flows in stablecoin channels seem a bit late to react. After entering November, with BTC's price continuously breaking through, a trend of significant inflows began to emerge. However, the total inflow of stablecoin channel funds for the month reached $19.5 billion, far exceeding ETF channel funds.
Daily statistics on capital flow in the crypto market
On November 22, the day BTC challenged the $100,000 mark, funds in the market began to flow into ETH, which rose by 9.31% on that day. In November, ETH recorded a cumulative increase of 47.05%, outpacing BTC, and the market seems to be opening up to Altseason.
EMC Labs believes that after BTC breaks through the $100,000 mark, Altseason will gradually open. Once Altseason opens, the market will gradually present: 1. ETH breaks historical highs; 2. The market rises broadly; 3. The main market trends are gradually recognized.
Long-short game: Liquidity gives rise to the second wave of selling
The cycle is a game of collecting and distributing chips within the temporal and spatial range of long and short positions.
Long positions accumulate chips during the decline, bottoming, and recovery periods, while continuously selling during the rising and transition periods, until liquidity cannot absorb the selling pressure, leading to a market reversal.
Since the beginning of this cycle in January 2024, long positions have initiated the first wave of large-scale selling. After the market entered consolidation in March, it returned to a state of accumulating chips. In November, with liquidity recovering and prices reaching new highs, long positions have already initiated the second wave of selling, which is also the last wave of large-scale selling in this cycle.
15 years of BTC long-term selling history
As of the end of September, the long positions were 14.22 million, and by the end of November, the selling positions had reached 13.69 million, with a two-month 'selling scale' of 530,000.
During the upward phase, the motivations for long selling stem from price increases driven by liquidity, and rising prices also serve as a self-affirming process for the market, triggering more capital inflows.
The secondary selling by long positions has just been conducted for two months, and with the continuous increase in liquidity, it is expected to continue into the first half of 2025.
Conclusion
In November, the cycle once again demonstrated its strong market adjustment capabilities.
EMC Labs believes that the fundamental reason for the price increase of BTC and the entire crypto market lies in the continuous interest rate cuts by major global economies and the significant increase in investor risk appetite, based on a well-structured internal consolidation. Additionally, the substantial increase in adoption and expectations of U.S. national policy have also provided significant emotional and material momentum.
We believe that these external factors will continue to provide support for the crypto market over the next year. Therefore, after the resumption of the crypto bull market, it will continue to rise, with some fluctuations in between, but the latter half of the upward phase is destined to provide even richer returns for long-term investors.
EMC Labs (Emerging Markets Crypto Labs) was founded in April 2023 by crypto asset investors and data scientists. Focusing on blockchain industry research and investments in the secondary crypto market, with industry foresight, insights, and data mining as core competencies, it aims to participate in the burgeoning blockchain industry through research and investment, promoting blockchain and crypto assets for the benefit of humanity.
For more information, please visit: https://www.emc.fund
