Written by: 0xWeilan, Source: EMC Labs

The wheel of the cycle is turning, pushing the market that was full of fear and hesitation not long ago into a new stage, and trading emotions suddenly heated up.

As we predicted: after the internal consolidation of the crypto market has been completed, this month ushered in an external tipping point - the US presidential election ended on November 6, and Republican candidate Trump, who is friendly to Crypto, won. , BTC prices continue to hit new highs, approaching $100,000.

The settlement of this major event of the year has enabled traders in various financial markets to gradually get out of chaos and uncertainty and return to the established trading rhythm, and US stocks have resumed their rise. "Trump Economy" is expected to become a major trading point, with Tesla, MicroStrategy, etc. becoming the targets with the largest gains.

BTC suddenly started amidst the decline at the end of October, overcoming multiple technical suppressions such as the "new high consolidation zone" and the "rising trend line" in one fell swoop, constantly setting new historical highs, with the highest peak reaching $99,860, throughout the month. A sharp increase of 37.42% was recorded.

As the trading market heated up, November saw a huge inflow of funds, with an inflow of US$25.9 billion recorded throughout the month, making it the largest month in the history of the Crypto market.

With BTC approaching the $100,000 mark, continued capital inflows have finally triggered a sharp and general rise in Altcoin represented by ETH.

EMC Labs’ comprehensive multi-dimensional judgment shows that the second wave of the “rising period” of this cycle’s encryption market has begun, and in the future, funds in the market will gradually flow into Altcoin to form a general rising market.

The conflict between the high inflation that may be caused by the "Trump Economy" and the Federal Reserve's ongoing rate cut has become the biggest uncertainty. However, this uncertainty is just a bit of disharmony in the big certainty and is not enough to change the trend of market operation.

Macro Finance: Trump Economy

"Trump Economy" mainly includes tax cuts and deregulation, protectionist trade, energy independence and traditional energy support, fiscal expansion and debt risks, immigration and labor, and Debt management and more.

The economy guided by the "America First" spirit will pose a great challenge to the existing global trade and financial order, triggering unpredictable conflicts and chaos. Even in the United States, economic growth, illegal immigration, and the financial system will form seemingly irreconcilable contradictions.

Repatriating illegal immigrants and raising tariffs may push up inflation. However, federal interest rates are still at a high level, inflation rebounds, and interest rate cuts may be blocked. Without interest rate cuts, fiscal expansion will undoubtedly be more difficult, and the high debt scale will make the United States even more overwhelmed.

The Federal Reserve, which is in the process of cutting interest rates and shrinking its balance sheet, is also facing a dilemma. The U.S. CPI rebounded as expected in November, while employment data and economic conditions remained good, which means that the need for interest rate cuts has been greatly reduced. Although the dot plot and meeting minutes released by the Federal Reserve indicate that 1A 25 basis point interest rate cut in February is still a high probability event, but the rate cut process in 2025 will most likely slow down.

Powell hopes to uphold professionalism, maintain economic stability, and normalize inflation levels. But Trump has made it clear that he will use changes and conflicts to fulfill his campaign promises - lower corporate taxes, increase import tariffs and provide more jobs. The two claims are almost irreconcilable, and their contradictions have become public.

Although there is great uncertainty, traders in various markets are already taking sides and giving decision-making results - long the U.S. economy. The most optimistic result is "high inflation and high growth."

In November, Nasdaq, Dow Jones and S&P 500 recorded increases of 6.21%, 7.54% and 5.74% respectively, while RUT2000, which represents small and medium-sized enterprises, recorded an increase of 11.01% and set a record. new high.

In terms of U.S. bonds, the long-term and short-term yields at the end of the month closed at 4.177% and 4.160% respectively, both recording slight declines, indicating that the bearish risk of U.S. bonds has temporarily decreased.

The U.S. dollar index continued to rise, closing at 105.74 in November, up another 1.02% from the previous month. At the same time, the euro, RMB, and Japanese yen all depreciated against the U.S. dollar. In the future, global funds are optimistic about the US financial market, and the trend of snapping up US dollar-denominated assets continues.

Correspondingly, gold, which is responsible for global safe-haven funds, fell 3.41% during the month, recording the largest monthly decline in 14 months. As we gradually emerge from the post-epidemic era, liquidity is becoming increasingly abundant, and the risk appetite of global funds is increasing. Equity assets, as well as Crypto represented by BTC, are the beneficiaries of this improvement.

Crypto assets: BTC hits record high, Altseason starts at any time

In November, BTC opened at US$70,198.02 and closed at US$96,465.42, an increase of 37.42%, an amplitude of 47.12%, and the trading volume was effectively amplified.

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 "new high" that had been stuck for eight months. The upper edge of the "consolidation area" was suppressed, and it once again set foot on the "uptrend line" after a lapse of 4 months.

BTC daily price trend

On the monthly line, BTC realized It has been rising continuously in March and the volume can continue to increase moderately, showing a healthy upward trend.

BTC monthly price trend

In previous research reports, we have repeatedly emphasized that March of this year By October's new high consolidation zone, more than 30% of BTC had undergone address transfer. This upward repricing has occurred repeatedly in the past cycle and has become an internal structural support for future price increases.

The final price breakthrough requiresIt needs external conditions to trigger it.

The biggest event in the world in November was Trump's re-election as President of the United States. His previous enthusiasm for Crypto and the "promise" he made during the campaign became the reason why BTC broke through and stayed there for as long as eight months. The emotional catalyst of the "new high consolidation zone".

Is BTC’s “Trump market” sustainable? EMC Labs believes that whether it is the "21st Century Financial Innovation and Technology Act" proposed last year, this year's "U.S. Bitcoin Strategic Reserve Draft", or even the "Bitcoin Bill of Rights" just passed by the Pennsylvania House of Representatives, all indicate that the United States is committed to The adoption of Crypto has gradually shifted from "allowing" to "promoting". The goal is to use laws, regulations and Strategic support will ultimately gain control of the crypto-assets and blockchain industries (public chains, infrastructure and decentralized application projects) represented by BTC, ensuring that the United States gains dominance in this emerging track.

Therefore, in the next few years, support from the United States and the adoption of Crypto by traditional institutions, including financial institutions and listed companies, can be expected to continue to increase. At no other time in history has the blockchain industry and cryptoassets achieved such acceptance and adoption.

Surge in liquidity: the two major channels resonated to create a historical record

The continued inflow of funds is the material support for the bull market.

In November, the BTC Spot ETF and stablecoin channel collectively inflowed US$25.9 billion, setting the largest single-month capital inflow on record. Among them, the ETF channel is 5.4 billion and the stablecoin channel is 19.5 billion. In November, ETF capital inflows exceeded February, becoming the month with the largest inflows.

Monthly statistics on capital flows in the crypto market

Since October, as the US election is coming to an end, the first to launch It is ETF channel funds. Since September, the inflow scale of funds through this channel has gradually increased, with inflows of 1.2 billion, 5.4 billion and 6.4 billion respectively from September to November. We have emphasized before that the funds in the ETF channel have independent will and will gradually control the price trend of BTC. This is fully reflected in the recent market conditions.

Compared with the "big brother" who is brave enough to shoulder the heavy responsibility, the stablecoin channel funds are a little bit behind the scenes. After entering November, as the price of BTC continued to break through, it began to show a trend of heavy inflows. However, the monthly inflow of stablecoin channel funds reached US$19.5 billion, far exceeding the ETF channel funds.

Daily statistics of fund flows in the crypto market

After BTC hit the $100,000 mark on November 22 On the same day, funds on the market began to activate ETH, with an increase of 9.31% that day. The cumulative increase of ETH in November reached 47.05%, surpassing BTC, and the market seems to be opening the Altseason.

EMC Labs believes that after BTC breaks through the $100,000 mark in the market outlook, Altseason will gradually open. After the opening of Altseason, the market gradually showed: 1. ETH broke through the historical high; 2. The market generally rose; 3. The main market trend was gradually recognized.

The game of long and short: Liquidity prompts the second wave of selling

The cycle is a game of collecting and distributing chips between long and short hands within the scope of time and space.

Long-term players collect chips during the decline, bottom-out and repair periods, and continue to sell during the rise and conversion periods until liquidity is unable to absorb the selling pressure and the market reverses.

In this cycle, since January 2024, Changshou launched the first large-scale sell-off, and then returned to the state of chip accumulation after the market entered consolidation in March. In November, as liquidity recovered and prices hit new highs, Changshou has launched the second round of selling, which is also the last large-scale selling in this cycle.

The history of long-term selling of BTC in the past 15 years

As of the end of September, there were 14.22 million long-term positions. At the end of November, the scale of selling positions reached 13.69 million pieces, and the "selling scale" in two months reached 530,000 pieces.

During the rising period, the motivation for long-term selling is the price increase brought about by liquidity, and the price increase is also a self-certifying process of the market, which will trigger more capital inflows.

The secondary sell-off of Changshou has just been going on for 2 months. As liquidity continues to increase, it is expected to continue in 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 rise in the price of BTC and the entire crypto market is that on the basis of a complete internal structure, the continued interest rate cuts in the world's major economies and the significant increase in investor risk appetite are the fundamental reasons. In addition, the huge increase in adoption and US expectations also provide great emotional and material momentum.

We believe that these external factors will continue to provide momentum and support for the encryption market in the coming year. Therefore, the crypto bull market will continue to rise after it restarts. There will still be twists and turns in the middle, but the second half of the rising period is destined to provide more generous returns for long-term investors.