Author: 0xBrooker
The Federal Reserve's interest rate cuts and liquidity injection raised the price floor of BTC this week; disappointing earnings reports from AI tech stocks continued to squeeze the valuation of high-beta assets, suppressing BTC's upward momentum. Ultimately, after testing last week's highs, BTC continued its medium-term "bottom-seeking" trend.
ETH, which had experienced steeper declines earlier, showed a stronger rebound but eventually retreated along with the broader market.
Driven by the rate cuts and a slight improvement in short-term liquidity, both attempted to break through the descending trendline this week but ultimately failed, falling back within the upper bounds of the descending trendline.
Overall, BTC maintained its synchronized movement with the Nasdaq, awaiting the release of November's CPI and non-farm payroll data next week to provide direction for a market lacking trading catalysts, while also facing the impact of Japan's potential rate hike.
Policy, Macro Finance, and Economic Data
After a roller-coaster ride that severely impacted BTC's rally, the Federal Reserve's November meeting cut rates by 25 basis points to 3.50%~3.75% as expected. The Fed's statement emphasized: in the "balancing of dual mandate risks," downside risks on the employment side have increased, while inflation "remains slightly elevated"; future adjustments will depend on data, outlook, and risk balance to determine the "magnitude and timing of further adjustments." This indicates that, regarding its dual mandate, the Fed is currently slightly leaning toward the employment side.
This somewhat dovish statement was diluted by internal discord within the Fed—9 out of 12 voted in favor, while 3 opposed (1 advocated for a 50bp cut; 2 advocated for no cut).
The dot plot for 2026~2028 is significantly more dispersed, indicating disagreement on the balance between "sticky inflation vs. slowing employment"; the right-side "Longer run" dots are concentrated around 3% to slightly above 3%, suggesting a policy implication that the long-term neutral rate may be higher than pre-pandemic levels. This lowered the expected rate cuts for 2026 to 1~2 cuts totaling 50 basis points. This is a neutral guidance that may provide some support for employment but is insufficient to bolster high-beta assets in the current state.
To address short-term liquidity tightness, the Fed resumed short-term Treasury purchases. The press conference explained that, to maintain "ample reserves," it would conduct RMP (Reserve Management Purchases), with about $40 billion in the first month, and emphasized that RMP does not signal a change in monetary policy stance. The first purchase has already been completed.
After more than a month of valuation compression, high-beta assets represented by AI tech stocks have not stabilized. Earnings reports from Oracle and Broadcom this week further shook market confidence.
Following the stock price surge driven by Q3 spending expansion, the market is now more focused on the debt issues of AI stocks and whether high investments can quickly translate into profit growth. The earnings reports from these two companies delivered a "one-soft, one-hard" double blow, prompting the market to reassess the "AI return realization cycle," leading to AI-weighted stocks dragging down the Nasdaq and overall risk appetite. Both Nvidia and BTC lost their rebound gains, returning to this week's starting point.
The 10-year U.S. Treasury yield remains around 4.18%, suppressing long-duration assets.
Although the Fed has begun purchasing bonds and the Treasury's TGA account has started to decline due to spending, with SOFR returning to within the federal funds rate range, short-term liquidity is gradually easing out of tight conditions but remains insufficient. Amid doubts about AI stock debt and profit returns, there are signs of funds shifting from tech to consumer and cyclical stocks. Both the Dow Jones and Russell 2000 indices hit new highs this week.
Against the backdrop of unclear rate cut prospects for 2026 and the unresolved appointment of a new Fed chair, high-beta assets, including AI tech stocks and BTC, have yet to attract fund inflows. The most optimistic estimate is that the market might open a "Santa Claus rally" only after Japan's potential rate hike next week and the release of U.S. employment and inflation data.
Crypto Market
This week, BTC opened at $90,402.30 and closed at $88,171.61, down 2.47% with a 7.83% amplitude, and trading volume slightly decreased. Technically, BTC briefly broke through the descending trend channel before the rate cut but gave back all gains due to the impact of AI stock earnings.
BTC Price Trend (Daily)
Currently, BTC is still in a consolidation phase after a sharp decline. Whether it will rebound upward with the stock market to usher in a "new cycle" or consolidate further and crash again to confirm the "old cycle" depends on the叠加 of internal and external factors and market reactions.
On the funding side, the situation is relatively optimistic. Available data show that inflows did not change significantly this week, but last week, Strategy increased its BTC holdings by over $900 million, and Bitmine also significantly increased its ETH holdings. This undoubtedly greatly boosted market confidence.
Crypto Market Fund Flows (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 side, the situation is slightly pessimistic. Last week, long and short hands collectively sold over 157,000 coins, exceeding the scale of the previous two weeks. As selling increased, exchange outflows also saw a slight decline.
Exchange Selling and Inflow/Outflow Statistics (Weekly)
Moreover, the long-hand group continues to sell. The historical cycle curse still profoundly affects this group. If they do not return to accumulation, BTC prices may struggle to stabilize.
There are also positive developments at the industry level. The CFTC announced the launch of a digital asset pilot, allowing regulated derivative markets to use BTC, ETH, and USDC as collateral, accompanied by stricter monitoring and reporting mechanisms. This breakthrough in using crypto assets as collateral in derivative scenarios benefits the integration of DeFi and CeFi, expands Crypto's application scenarios, and is a long-term positive for Crypto. Additionally, the highly anticipated "structural solution" was reported to have made progress and received bipartisan support from Democrats and Republicans. The eventual passage of this bill would benefit the further development of the crypto industry in the U.S. and promote increased institutional allocation to crypto assets.
Cycle Indicators
According to eMerge Engine, the EMC BTC Cycle Metrics is at 0, entering a "downturn phase" (bear market).
