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.Written by  0xBrooker

The Fed's rate cut and liquidity injection raised the bottom for BTC this week; disappointing earnings reports from AI tech stocks continued to squeeze the valuations of high-beta assets, limiting BTC's upside potential. Ultimately, after testing last week's high, BTC continued its medium-term "bottoming out" trend.

ETH, which experienced a larger drop earlier, rebounded more strongly, but eventually followed the overall market trend and fell back.

Driven by interest rate cuts and a slight improvement in short-term liquidity, both attempted to break through the downtrend line this week, but ultimately failed and fell back to the upper edge of the downtrend line.

Overall, BTC is moving in tandem with the Nasdaq, awaiting the release of November's CPI and non-farm payroll data next week to provide guidance for a market lacking trading opportunities. It also faces the impact of Japan's interest rate hike next week.

Policy, macro-financial and economic data

After a rollercoaster ride that severely impacted Bitcoin's rally, the Federal Reserve cut interest rates by 25 basis points to 3.50%-3.75% as expected at its November meeting. The Fed's statement emphasized that in the "dual mandate risk trade-off," downside risks to employment have increased, while inflation "remains slightly elevated"; further adjustments will depend on data, the outlook, and the balance of risks to determine "the magnitude and timing of further adjustments." This implies that the Fed is currently slightly biased towards the employment side in its dual mandate.

This somewhat dovish statement was overshadowed by internal discord within the Federal Reserve—9/12 in favor, 3 against (1 advocated for a 50bp cut; 2 advocated for no cut).

The dot plot for 2026-2028 is significantly more dispersed, indicating inconsistent considerations regarding the trade-off between "sticky inflation" and "slowing employment." The "longer run" points on the right are concentrated in the range of around 3% to slightly above 3%, suggesting a policy implication that the long-term neutral interest rate may be higher than before the pandemic. This reduces the expected rate of decline in 2026 to 1-2 times, totaling 50 basis points. This is a neutral-leaning guidance that may offer some support for employment, but is insufficient to support high-beta assets under the current circumstances.

In response to short-term liquidity constraints, the Federal Reserve restarted its purchases of short-term Treasury bonds. The press conference explained that the Reserve Required Money Market Fund (RMP) would be implemented to maintain "ample reserves," with approximately $40 billion allocated in the first month. The Fed emphasized that the RMP does not signify a change in its monetary policy stance. The first tranche of purchases has already been completed.

After more than a month of valuation correction, AI technology stocks, representing high-beta assets, have not stabilized. Oracle and Broadcom's earnings releases this week have further shaken market confidence.

After Q3 spending expansion drove stock prices up, the market is now more focused on the debt issues of AI stocks and whether high investment can quickly translate into profit growth. The release of two earnings reports created a double whammy, one soft and one hard, causing the market to re-price the "AI return on investment cycle," resulting in AI-heavy stocks dragging down the Nasdaq and overall market risk appetite. Nvidia and Bitcoin both lost their rebound gains, returning to where they started this week.

The 10-year US Treasury yield remains around 4.18%, putting downward pressure on long-duration assets.

Although the Federal Reserve has begun purchasing bonds and the Treasury's TGA account has started to decline due to spending, the SOFR has returned to within the federal funds rate range, and short-term liquidity is gradually easing from its tight state, but it is still not abundant. Given concerns about the debt and profit returns of AI stocks, there are signs that US stock market funds are shifting towards consumer and cyclical stocks. Both the Dow Jones and Russell 2000 indices hit new highs this week.

Amid uncertainty surrounding interest rate cuts in 2026 and the yet-to-be-determined new Federal Reserve chairman, high-beta assets, including AI tech stocks and Bitcoin, have yet to attract significant investment. The most optimistic estimate is that the market might only begin a "Christmas rally" after Japan raises interest rates next week and the US releases employment and inflation data.

Crypto Market

This week, BTC opened at $90,402.30 and closed at $88,171.61, a decrease of 2.47% with a volatility of 7.83% and a slight decrease in trading volume. Technically, BTC broke through the downward trend channel before the interest rate cut, but subsequently gave back all of that momentum due to the impact of AI stock earnings reports.

BTC Price Movement (Daily)

Currently, BTC is still in a consolidation phase after a sharp drop. Whether it will rebound upwards along with US stocks and enter a "new cycle," or whether it will collapse again after consolidation and continue to fall, confirming the "old cycle," depends on the combination of internal and external factors and the reactions of all parties in the market.

In terms of funding, the situation is relatively optimistic. Statistics show that there has been no significant change in inflows this week, but Strategy made over $900 million in BTC purchases last week, and Bitmine also significantly increased its ETH holdings, which undoubtedly boosted market confidence considerably .

Crypto Market Fund Inflows and Outflows Statistics (Weekly)

Among them, the BTC ETF and ETH ETF channels, which have significant pricing power over crypto assets, both recorded positive inflows, totaling over $500 million.

On the selling front, the situation is slightly more pessimistic. Last week, a total of over 157,000 tokens were sold across both long and short positions, exceeding the volume of the previous two weeks. Furthermore, as the selling increased, the outflow from exchanges also saw a slight decrease.

Exchange selling and inflow/outflow statistics (weekly)

Furthermore, long-term investors continue to sell. The historical cycle's influence on this group remains profound. If they cannot return to an accumulation phase, the price of BTC may struggle to stabilize.

There are also positive developments at the industry level. The CFTC announced the launch of a digital asset pilot program, allowing regulated derivatives markets to use BTC, ETH, and USDC as collateral, along with stricter monitoring and reporting mechanisms. This breakthrough in using crypto assets as collateral in derivatives scenarios facilitates the integration of DeFi and CeFi, increases the application scenarios for crypto, and is a long-term positive for crypto. Furthermore, the much-anticipated "structural bill" has reportedly made some progress and received unanimous support from both Democrats and Republicans. The final passage of this bill will benefit the further development of the crypto industry in the United States and will encourage institutions to further allocate crypto assets.

Cyclical Indicators

According to eMerge Engine, the EMC BTC Cycle Metrics indicator is 0, indicating that it has entered a "downtrend" (bear market).

EMC Labs was founded in April 2023 by crypto asset investors and data scientists. Focusing on blockchain industry research and cryptocurrency secondary market investment, EMC Labs leverages industry foresight , insights, and data mining as its core competencies. It is committed to participating in the booming blockchain industry through research and investment, driving the benefits of blockchain and crypto assets to humanity.

For more information, please visit: https://www.emc.fund