EMC Labs November Report: BTC Approaching $100,000, Surging Liquidity to Spark Altcoin Rally

Original Article Title: "EMC Labs November Report: BTC Nearing $100,000, Surging Liquidity Rekindles Crypto Bull Market"

Original Article Author: 0xWeilan, EMC Labs

The wheels of the market cycle have turned, propelling a market that was recently filled with fear and hesitation into a new phase, with trading heating up in this sudden surge of emotion.

As predicted in our October report "Monthly Gain of 10.89%, BTC Could Hit New High Post-U.S. Election Chaos": the previous consolidation within the crypto market has ended, and this month saw an external catalyst—the conclusion of the U.S. presidential election on November 6th. With the Republican candidate Trump, known for his friendly stance towards crypto, emerging victorious, BTC price has continuously hit new highs, nearing $100,000.

The resolution of this major event of the year has gradually led traders in various financial markets out of chaos and uncertainty, back to their established trading rhythms, with the U.S. stock market resuming its climb. Expectations of the "Trump economic policy" became a major trading point, with Tesla, MicroStrategy, and others experiencing the largest gains.

In late October, BTC suddenly surged amid a downturn, breaking through multiple technical resistances such as the "new high consolidation zone" and the "upward trend line," continuously setting new all-time highs, surging to a peak of $99,860, with a significant monthly gain of 37.42%.

Alongside the warming trading sentiment, November saw a massive influx of funds, with a total of $25.9 billion flowing in throughout the month, marking the largest inflow in the history of the crypto market.

Against the backdrop of BTC nearing the $100,000 milestone, the sustained inflow of funds finally triggered a sharp rise and general surge in Altcoins led by ETH.

EMC Labs' comprehensive analysis indicates that the second wave of the current cycle's crypto market "bull run" has begun, with funds from within the market gradually flowing into Altcoins, leading to a broad surge in the market.

The potential high inflation triggered by the "Trump economic policy" and the conflict with the Federal Reserve's pace of interest rate cuts represent the biggest uncertainty. However, this uncertainty is merely a minor discord in the grand scheme of certainty and is not enough to alter the market trend.

Macro Finance: Trump Economic Policy

The "Trump economic policy" mainly includes tax cuts and deregulation, protectionist trade policy, energy independence and support for traditional energy, fiscal expansion and debt risk, immigration and labor policies, and political and debt management.

Guided by the "America First" spirit, the economic policies will pose a significant challenge to the existing global trade and financial order, leading to unforeseeable conflicts and chaos. Even domestically in the United States, seemingly irreconcilable contradictions will arise across aspects such as economic growth, illegal immigration, and the financial system.

Deporting illegal immigrants and raising tariffs could both drive up inflation. With the federal interest rate still at a relatively high level, a rebound in inflation might hinder interest rate cuts. Yet without interest rate cuts, government fiscal expansion would undoubtedly face greater challenges, and the high level of existing debt would further burden the U.S. government.

The Federal Reserve, currently in a process of interest rate cuts and balance sheet reduction, is also facing a dilemma. The November U.S. CPI showed an expected rebound, while employment data and economic conditions continue to perform well, indicating a substantially reduced need for interest rate cuts. Although the dot plot and meeting minutes released by the Fed suggest that a 25 basis points rate cut in December is still a high probability event, the interest rate cut process in 2025 will likely slow down.

Powell hopes to uphold professionalism, maintain economic stability, and achieve a normalized level of inflation. However, Trump has made it clear that he will fulfill his campaign promises through reform and conflict—reducing corporate taxes, increasing import tariffs, and providing more domestic employment. The two sides' propositions are almost irreconcilable, and their contradictions have become public.

Although there is great uncertainty, traders in various markets have already taken sides and reached decisions—to be 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 rose by 6.21%, 7.54%, and 5.74%, respectively, while the RUT2000 representing small and medium-sized enterprises rose by 11.01% and reached a historical high.

Regarding U.S. bonds, the month-end long-term and short-term yields reached 4.177% and 4.160%, respectively, both registering slight declines, indicating a temporary decrease in bearish risks for U.S. bonds.

The U.S. dollar index continues to rise, closing at 105.74 in November, up by 1.02% from the previous month, while the euro, RMB, and yen all depreciated against the dollar. Global funds remain optimistic about the U.S. financial markets in the future, and the trend of buying dollar-denominated assets continues.

Correspondingly, gold, which attracts global safe-haven funds, fell by 3.41% in the month, marking the largest monthly decline in 14 months. As we gradually move beyond the post-pandemic era and liquidity continues to overflow, global funds' risk appetite is increasing. Equity assets, as well as Crypto assets represented by BTC, are beneficiaries of this increased appetite.

Crypto Assets: BTC Hits an All-Time High, Altseason Ready to Start at Any Time

In November, BTC opened at $70,198.02, closed at $96,465.42, with a 37.42% increase, a 47.12% fluctuation, and significantly increased trading volume.

Following November's return to the "200-day moving average" and breaking above the "downtrend line," BTC continued to achieve a milestone breakthrough in technical indicators this month. It swiftly broke through the long-standing resistance at the upper boundary of the August "high consolidation zone" and once again stepped onto the "uptrend line" after a 4-month hiatus.

BTC Daily Price Trend

On the monthly chart, BTC saw a 3-month consecutive rise with sustained moderate volume expansion, demonstrating a healthy upward trend.

BTC Monthly Price Trend

In previous reports, we have repeatedly emphasized that from March to October of this year, over 30% of BTC in the "high consolidation zone" experienced address transfers. This upward repricing has repeatedly occurred in previous cycles and has become an internal structural support for future price increases.

However, the final breakthrough in price requires external catalysts.

The major global event in November was Trump's re-election as President of the United States. His prior enthusiasm for Crypto and the commitments made during the election process served as an emotional catalyst for BTC to break free from the extended "high consolidation zone" of 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 Act," or even the recently passed "Bitcoin Rights Act" by the Pennsylvania House of Representatives, they all indicate that the U.S.' adoption of Crypto is gradually shifting from "allowing" to "promoting." The goal is to gain control over the crypto asset and blockchain industry represented by BTC (public chains, infrastructure, and decentralized application projects) through legal regulations and national strategic support to ensure U.S. dominance in this emerging sector.

Therefore, in the coming years, support from U.S. policies and the increasing adoption of Crypto by traditional institutions, including financial institutions and publicly traded companies, is expected to continue to rise. At no point in history has the blockchain industry and crypto assets received such widespread acceptance and adoption.

Liquidity Surge: Two Major Channels Resonate to Create Historical Record

Continuous capital inflow is the material support of a bull market.

In November, the total inflow of the BTC Spot ETF and Stablecoin channels reached $25.9 billion, setting a record for the largest monthly inflow to date. The ETF channel received $5.4 billion, while the Stablecoin channel received $19.5 billion. In November, the scale of ETF inflows exceeded that of February, becoming the month with the largest inflows.

Monthly Statistics of Crypto Market Fund Flow

Since October, with the U.S. election nearing its end, the ETF channel funds were the first to be activated. The scale of inflows to this channel has been gradually increasing since September, with $1.2 billion, $5.4 billion, and $6.4 billion inflows in September, October, and November, respectively. We have emphasized before that the funds in the ETF channel have an independent will to gradually control the price trend of BTC. This has been fully demonstrated in the recent market.

Compared to the "leading brother" who shoulders heavy responsibilities, the Stablecoin channel funds seemed a bit slow to react. After entering November, with BTC price continuously breaking through, a trend of increased inflow started to emerge. However, the total inflow of Stablecoin channel funds in the whole month reached $19.5 billion, far exceeding the ETF channel funds.

Daily Statistics of Crypto Market Fund Flow

On November 22nd, when BTC surged to the $100,000 mark, internal funds began to activate ETH, which saw a 9.31% increase in a single day. In November, ETH's cumulative increase reached 47.05%, surpassing BTC, indicating that the market seems to be entering Altseason.

EMC Labs believes that after BTC breaks through the $100,000 mark, Altseason will gradually open up. After Altseason starts, the market will gradually show: 1. ETH breaking through its all-time high; 2. Market-wide rise; 3. Mainstream market trends being identified.

Long vs. Short Game: Liquidity Drives the Second Wave of Selling

The cycle is a game of collecting and distributing chips played by the long and short hands in the space-time range.

Whales accumulate chips during the downtrend, accumulation phase, and recovery phase, and continue to sell off during the uptrend and distribution phase until liquidity struggles to absorb the selling pressure, leading to a market reversal.

In this cycle, since January 2024, whales initiated the first large-scale sell-off, then returned to chip accumulation mode after the market consolidated in March. In November, as liquidity recovered and prices hit new highs, whales started the second wave of selling, which is also the final large-scale sell-off of this cycle.

15-Year History of BTC Whale Sell-Offs

As of the end of September, whales held 14.22 million coins, and by the end of November, the sell-off reduced their holdings to 13.69 million coins, with a two-month "sell-off scale" of 530,000 coins.

During the uptrend, whales sell off due to the price increase brought by liquidity, and the price increase is also a self-fulfilling process for the market, attracting more funds.

The whales' second round of selling has just lasted for 2 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 strong market adjustment capabilities.

EMC Labs believes that the fundamental reason for the price increase of BTC and the entire crypto market lies in the continuous rate cuts of major global economies and the significant increase in investor risk appetite on the premise of a well-structured internal framework, and the adoption rate has greatly improved, while expectations of U.S. national policies have also provided great emotional and material motivation.

We believe that these external factors will continue to provide momentum and support for the crypto market in the coming year. Therefore, after the crypto bull market restarts, it will continue to rise, with bumps along the way, but the second half of the uptrend is bound to provide more generous returns to long-term investors.

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