EMC Labs November Report: BTC Approaches $100,000, Surging Liquidity Reignites Crypto Bull Market
Written by: 0xWeilan
The cyclical wheel turns, pushing a market that was recently filled with fear and hesitation into a new phase, as trading heats up with sudden intensity.
As we predicted in our October report "10.89% Monthly Increase: BTC May Reach New High After Chaos of U.S. Elections": The internal consolidation of the crypto market has been completed, and this month welcomes an external trigger------the conclusion of the U.S. presidential election on November 6, with Republican candidate Trump, who holds a friendly attitude towards Crypto, winning , BTC price continuously reaches new highs, approaching $100,000.
The resolution of this major annual 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. Expectations of "Trump's economic policy" become the main 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 "upward trend line," continuously setting historical new highs, peaking at $99,860, with a significant increase of 37.42% for the month.
As trading heats up, November sees a massive influx of capital, recording $25.9 billion in inflows 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 influx of funds finally triggers a sharp rise 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 crypto market cycle has begun, and funds will gradually flow into Altcoins, forming a broad market rally.
However, the potential high inflation triggered by "Trump's economic policy" and the conflict with the Federal Reserve's ongoing rate cuts become the biggest uncertainty. Yet, this uncertainty is merely a slight discord in the larger certainty, insufficient to change the trend of market operation.
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 risks, immigration and labor policies, as well as political and debt management.
These economic policies, guided by the "America First" spirit, will pose significant challenges to the existing global trade and financial order, leading to unpredictable conflicts and chaos. Even within the U.S., aspects such as economic growth, illegal immigration, and the financial system may create seemingly irreconcilable contradictions.
The repatriation of illegal immigrants and the increase in tariffs may push up inflation, while federal interest rates remain relatively high, leading to a rebound in inflation that could hinder rate cuts. Without rate cuts, the government's fiscal expansion will undoubtedly face greater difficulties, and the high debt levels will further burden the U.S. government.
The Federal Reserve, currently in a process of rate cuts and balance sheet reduction, also faces a dilemma. In November, the U.S. CPI showed a rebound as expected, while employment data and economic conditions remain strong, indicating that the necessity for rate cuts has significantly weakened. Although the dot plot and the minutes from the Federal Reserve's meetings suggest that a 25 basis point rate cut in December is still likely, the rate cut process in 2025 will likely slow down.
Powell hopes to uphold professionalism, maintain economic stability, and normalize inflation levels. However, Trump clearly intends to fulfill his campaign promises through reform and conflict------reducing corporate taxes and increasing import tariffs to provide more domestic jobs. The two positions are almost irreconcilable, and their contradictions have become public.
Despite the significant uncertainty, traders in various markets have already taken sides 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-cap companies, recorded an 11.01% increase, reaching a historical high.
In terms of U.S. Treasury bonds, the long-term and short-term yields at the end of the month were 4.177% and 4.160%, respectively, both showing slight declines, indicating a temporary decrease in bearish risks for U.S. Treasuries.
The U.S. dollar index continued to rise, closing at 105.74 in November, up 1.02% from the previous month, while the euro, yuan, and yen 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 attracts global risk-averse funds, fell 3.41% in the month, recording the largest monthly decline in 14 months. As we gradually emerge from the post-pandemic era, liquidity is becoming increasingly abundant, and global risk appetite is on the rise. Equity assets, as well as Crypto represented by BTC, are beneficiaries of this increase.
Crypto Assets: BTC Hits Historical New 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%, a volatility of 47.12%, and a significant increase in trading volume.
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 stuck for eight months, and stepping onto the "upward trend line" again after four months.
BTC Daily Price Trend
On the monthly chart, BTC achieved three consecutive monthly increases with continuously moderate volume expansion, showing a healthy upward trend.
BTC Monthly Price Trend
In previous research reports, we have repeatedly emphasized that over 30% of BTC in the new high consolidation zone from March to October this year has undergone address transfers. This upward repricing has repeatedly occurred in past cycles, becoming an internal structural support for future price increases.
However, the final breakthrough in price requires external conditions to catalyze it.
The biggest global event in November was Trump's re-election as U.S. president, and his previous enthusiasm for Crypto and "promises" 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 is last year's proposed "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 of Representatives, 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 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, is expected to continue to increase. At no point in history have the blockchain industry and crypto assets received such a strong level of acceptance and adoption.
Liquidity Surge: Two Major Channels Resonating to Create Historical Records
Continuous capital inflow is the material support for a bull market.
In November, the combined inflow from the BTC Spot ETF and stablecoin channels reached $25.9 billion, setting a record for the largest single-month capital inflow ever recorded. Among them, the ETF channel accounted for $5.4 billion, and the stablecoin channel accounted for $19.5 billion. November saw the ETF capital inflow scale exceed that of February, becoming the largest inflow month.
Monthly Statistics of Capital Flow in the Crypto Market
Since October, as the U.S. elections approached their conclusion, the first to activate was the ETF channel funds. This channel's funds began to gradually increase since September, 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 control BTC's price movements. This has been fully reflected in the recent market.
In contrast to the "leading brother" taking on heavy responsibilities, the stablecoin channel funds appeared to be slightly late to the party. After entering November, the influx began to show a significant increase only as BTC prices continued to break through. However, the stablecoin channel's total inflow for the month reached $19.5 billion, far exceeding the ETF channel funds.
Daily Statistics of Capital Flow in the Crypto Market
On November 22, when BTC attempted to breach the $100,000 mark, funds in the market began to activate ETH, which surged by 9.31% that day. In November, ETH's cumulative increase reached 47.05%, surpassing BTC, indicating that 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 up. Once Altseason opens, the market will gradually present: 1. ETH breaking historical highs; 2. A broad market rally; 3. The main market trends gradually being identified.
Long-Short Game: Liquidity Triggers Second Wave of Selling
Cycles are a game of collecting and distributing chips in the time-space range between long and short hands.
Long hands collect chips during the downward, bottoming, and repairing phases, while continuously selling during the upward and transition phases until liquidity can no longer absorb the selling pressure, leading to a market reversal.
Since January 2024, the long hands have initiated the first wave of large-scale selling, and after the market entered consolidation in March, they returned to a state of chip accumulation. In November, as liquidity recovered and prices reached new highs, the long hands have started the second wave of selling, which is also the last large-scale selling in this cycle.
15-Year History of Long-Hand Selling of BTC
As of the end of September, long hands held 14.22 million BTC, and by the end of November, the selling holdings reached 13.69 million BTC, with a "selling scale" of 530,000 BTC over the two months.
During the upward phase, the motivation for long hands to sell is the price increase brought about by liquidity, while the price increase is also a self-affirming process for the market, which will trigger more capital inflows.
The second wave of selling by long hands has just been underway 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 powerful market adjustment ability.
EMC Labs believes that the fundamental reason for the price rise of BTC and the entire crypto market lies in the complete internal structural consolidation, coupled with the continuous rate cuts by major global economies and a significant increase in investors' risk appetite. Additionally, the substantial increase in adoption and expectations of U.S. national policies also provide tremendous 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 crypto bull market restarts, it will continue to rise, with potential fluctuations 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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EMC Labs was founded in April 2023 by crypto asset investors and data scientists. It focuses on blockchain industry research and secondary market investment in Crypto, with industry foresight, insights, and data mining as its core competitiveness, aiming to participate in the thriving blockchain industry through research and investment, promoting blockchain and crypto assets for the benefit of humanity.