Original title: (EMC Labs November Report: BTC approaches $100,000, surging liquidity reignites the crypto bull market)
Original author: 0xWeilan, EMC Labs
The cyclical giant wheel turns, pushing a market that was once filled with fear and hesitation into a new phase, with trading emotions 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. elections): The previous internal consolidation of the crypto market has completed, and this month welcomes an external ignition point—on November 6, after the conclusion of the U.S. presidential election, Republican candidate Trump, who holds a friendly attitude towards Crypto, wins, and the BTC price continues to set new highs, approaching $100,000.
The resolution of this year's major event allows traders in various financial markets to gradually emerge from chaos and uncertainty, returning to a set trading rhythm, with U.S. stocks resuming their upward trend. The 'Trump economic policy' is expected to become the main trading point, with Tesla, MicroStrategy, and others becoming the stocks with the largest gains.
BTC, in the midst of a downturn at the end of October, suddenly started, smashing through multiple technical pressures such as the 'new high consolidation zone' and the 'upward trend line', continuously setting historical new highs, with the highest surge reaching $99,860, recording a significant increase of 37.42% for the month.
With the trading market heating up, November saw a massive inflow of funds, recording a total inflow of $25.9 billion for the month, making it the largest single month of inflow 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 surge in Altcoins represented by ETH, leading to a broad market rally.
EMC Labs comprehensively assesses that the second wave of the 'upward phase' in the current cycle of the crypto market has already started, and funds in the market 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 Fed's ongoing rate-cutting rhythm becomes the biggest uncertainty. However, this uncertainty is merely a slight discord in the grander scheme, insufficient to change the market's operational trend.
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, and political and debt management.
These economic policies led by the 'America First' spirit will pose a significant challenge to the existing global trade and financial order, triggering unpredictable conflicts and chaos. Even within the United States, aspects such as economic growth, illegal immigration, and the financial system will create seemingly irreconcilable contradictions.
Deporting illegal immigrants and raising tariffs may both push up inflation, while federal interest rates remain high; inflation rebound may hinder rate cuts. Without rate cuts, the government's fiscal expansion will undoubtedly become more challenging, 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 dilemmas. In November, U.S. CPI saw a rebound as expected, while employment data and economic conditions remained good, indicating that the necessity for rate cuts has greatly diminished. Although the dot plot and the minutes published by the Fed 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 clearly plans to fulfill his campaign promises through reform and conflict—reducing corporate taxes and increasing import tariffs to provide more domestic jobs. The claims of both are almost irreconcilable, and their contradictions have become public.
Although there is great uncertainty, traders in various markets have already taken their positions and made decisions—bullish on the U.S. economy, with the most optimistic outcome being 'high inflation, 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 new all-time high.
Regarding U.S. debt, yields on the long and short ends closed at 4.177% and 4.160% respectively at the end of the month, both showing a slight decline, indicating that the bearish risk on U.S. debt has temporarily decreased.
The U.S. dollar index continues to rise, closing in November at 105.74, 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 purchasing dollar-denominated assets continues.
Correspondingly, gold, which attracts global risk-averse funds, fell by 3.41% within the month, recording the largest monthly decline in 14 months. As we gradually emerge from the post-pandemic era, liquidity is increasingly abundant, and global risk appetite is on the rise. Equity assets, as well as Cryptos represented by BTC, are the beneficiaries of this increase.
Crypto assets: BTC reaches a historical new high, Altseason may start at any time.
In November, BTC opened at $70,198.02, closed at $96,465.42, with a growth of 37.42%, a volatility of 47.12%, and effective volume expansion.
After returning to the '200-day moving average' and crossing the 'downward 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 in place for eight months, and stepping back onto the 'upward trend line' after four months.
BTC daily price trend.
On the monthly chart, BTC has achieved three consecutive months of growth with steadily increasing volume, showing a healthy upward trend.
BTC monthly price trend.
In our previous research reports, we have repeatedly emphasized that more than 30% of BTC underwent 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 an internal structural support for future price increases.
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, along with the 'promises' made 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 the 'Trump market' for BTC 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 Proposal), or the recent passage of (Bitcoin Rights Act) by the Pennsylvania House of Representatives, all indicate that the adoption of Crypto in the U.S. is gradually shifting from 'allowing' to 'promoting'. The goal is to leverage laws, regulations, and national strategies to ultimately gain control over crypto assets and the blockchain industry (public chains, infrastructure, and decentralized application projects), 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.
Surging liquidity: The two major channels resonate to create historical records.
Continuous inflow of funds is the material support for a bull market.
In November, the total inflow from BTC Spot ETF and stablecoin channels reached $25.9 billion, setting a record for the largest monthly inflow ever. Among them, the ETF channel saw $5.4 billion, while the stablecoin channel saw $19.5 billion. In November, the ETF fund inflow exceeded that of February, making it the largest inflow month.
Monthly statistics of fund flows in the crypto market.
Since October, as the U.S. elections approached their conclusion, the first to initiate was the ETF channel funds. This channel has gradually increased its inflow scale since September, with inflows of $1.2 billion, $5.4 billion, and $6.4 billion in September to November respectively. We previously emphasized that the funds from the ETF channel, with independent will, will gradually take control of BTC's price trends. This has been fully reflected in recent market conditions.
Compared to the 'leading brother' who bravely bears heavy responsibilities, the funding from stablecoin channels seems slightly behind the curve. After entering November, with the continuous breakthroughs in BTC prices, a significant influx began to emerge. However, the total inflow of stablecoin channel funds for the month reached $19.5 billion, far exceeding that of ETF channel funds.
Daily statistics of fund flows in the crypto market.
On November 22, when BTC surged towards the $100,000 mark, market funds began to activate ETH, with a daily increase of 9.31%. 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, Altseason will gradually open up. Once Altseason opens, the market will gradually show: 1. ETH breaks historical new highs; 2. The market rallies broadly; 3. Market trends gradually get recognized.
Long and short game: liquidity spurs the second wave of selling.
The cycle is a game of collecting and distributing chips by long and short holders in the span of time and space.
Long holders collect chips during the downward phase, bottoming phase, and recovery phase, and continuously sell during the upward phase and transition phase until liquidity is unable to absorb the selling pressure, leading to a market reversal.
Since the beginning of this cycle in January 2024, long holders have initiated the first large-scale selling, and after the market entered consolidation in March, they returned to a state of accumulating chips. In November, with the recovery of liquidity and prices hitting new highs, long holders have started the second wave of selling, which is also the last large-scale selling in this cycle.
15 years of BTC long holder selling history.
By the end of September, long holders held 14.22 million BTC, and by the end of November, the selling holdings reached 13.69 million BTC, with a two-month 'selling scale' reaching 530,000 BTC.
During the upward phase, the motivation for long holders to sell is the price increase brought about by liquidity, while the price increase is also a self-validating process of the market, which will attract more funds to flow in.
The second wave of selling by long holders has just taken place 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 rise in BTC and the entire crypto market lies in the significant reduction of interest rates by major global economies and the notable increase in investors' risk appetite, based on a solid internal structural consolidation. Additionally, the significant increase in adoption and expectations of U.S. national policies also provide substantial emotional and material momentum.
We believe that these external factors will continue to provide momentum support for the crypto market over the next year. Therefore, after the crypto bull market restarts, it will continue to rise, with ups and downs in between, but the latter half of the upward phase is destined to provide more substantial returns for long-term investors.
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