Huobi Growth Academy | Macro Research Report on the Crypto Market: Key Window for Macro Liquidity, Institutionalization, and Risk Reassessment

1. Overview of the Macroeconomic Situation in the Cryptocurrency Market

In the past few weeks, the cryptocurrency market has experienced a significant recovery in sentiment and prices after a strong pullback. BTC, as the benchmark asset of the market, once fell to $80,000, during which time the market exhibited widespread panic, with high-leverage positions being passively liquidated and short-term risk appetite rapidly declining. However, under the combined effects of changing macro expectations and structural market responses, BTC has recently rebounded quickly, returning above $94,000, with a reported 24-hour increase of 7% to 8% by multiple institutional platforms. This price behavior reflects both a moderation of the previous downtrend and indicates that the market is attempting to move from extreme pessimism toward structural recovery. This round of rebound is not driven by a single reason but is the result of the interplay of macro liquidity, changes in market structure, technical conditions, and capital behavior. First, from a macro perspective, changes in global monetary policy expectations have become an important variable affecting risk assets. The market's anticipation of future interest rate cuts by major central banks and the enhanced expectations of marginal liquidity improvement have led to renewed interest in high-risk assets. Due to the PPI data in November being far below expectations, inflationary pressures have continued to ease, and Federal Reserve officials have repeatedly emphasized that the core goal remains a "soft landing" before 2026, avoiding an early shift to tightening. According to the latest data from the CME FedWatch tool, the market's betting probability for a 25 basis point rate cut by the Federal Reserve on December 10 has surged from 35% a week ago to 89.2%. On the other hand, on December 1, U.S. time, the Federal Reserve officially announced the end of its quantitative tightening (QT) policy. On the same day, the cryptocurrency market experienced a collective rebound. Historical experience shows that both U.S. stocks and BTC tend to perform better during easing cycles or periods of easing expectations, and the current market reflects this turning sentiment. Although macro policies have not yet clearly reversed, the expectations themselves are sufficient to drive asset prices. Additionally, against the backdrop of high interest rate policies putting pressure on the real economy, the market tends to price in a policy shift in advance, providing more room for risk assets.

Secondly, from the perspective of market structure and capital flow, the formation of this round of rebound exhibits typical characteristics of "panic liquidation + institutional bottom-fishing." During the previous downtrend, exchange data showed that a large number of high-leverage long positions and some short positions were forced to liquidate, leading to a concentrated release of liquidity. Historically, such phases are often accompanied by exaggerated directional movements and extreme emotions, with capital flow behavior undergoing a reverse change. Some long-term capital has positioned itself after a significant sell-off, creating support in the bottom region. Furthermore, when short positions become concentrated, the rebound process is prone to trigger "short squeezes," further driving up prices and accelerating the rebound, thus forming a typical rebound pattern of "structural short squeeze + capital reversal." Technical analysis also provides an explanation for the rebound. BTC has repeatedly tested and held support in the $86,000 to $88,000 range, indicating that this price level has become a temporary bottom and a dense area of chips. The rapid rebound in short-term prices is also related to the previous overselling. If technical support is formed and combined with capital inflow, it usually brings about momentum improvement and a shift in trading behavior. Recent market performance shows a synchronization of increased trading volume and price breakthroughs at key levels, indicating that some buying pressure is proactive rather than merely supported by short covering. However, since the overall market trading volume has not yet fully displayed characteristics confirming a long-term trend, this round of rebound remains in an observation window, and whether it can form a higher structure needs further verification.

In addition to BTC's recovery status, the market is more concerned about whether the rebound will drive the linkage and rotation of ETH and altcoin markets. The Fusaka upgrade activated on December 4 is another important upgrade for Ethereum after the merge. Its core PeerDAS technology increases the Blob capacity from 9 to 15, allowing Layer 2 transaction fees to decrease by an additional 30% to 50% on the current basis, and for the first time enables ordinary accounts to have "account abstraction (AA)" capabilities such as social recovery and batch operations. This upgrade not only optimizes data availability management but, more crucially, paves the way for Verkle Trees' stateless clients, compressing node synchronization time from weeks to hours. Historical experience shows that every round of rebound in the cryptocurrency market has a pattern of capital migration from mainstream assets to secondary assets and then to high-risk assets. The stabilization and rebound of the ETH/BTC exchange rate ratio suggest that capital may rotate from Bitcoin to altcoins. However, this migration requires certain conditions to be met. First, risk appetite must continue to improve, not just be limited to a temporary emotional recovery; second, the market must have sufficient liquidity, rather than relying on short-term trading to drive it; third, the trend of mainstream assets needs to be stable, rather than being in a state of high volatility without direction. Currently, BTC's rebound is not only restoring market sentiment but also prompting some capital to focus on ETH and certain large altcoins. ETH has risen in tandem during this rebound and has returned to a key range, which has a positive impact on market confidence.

It is worth noting that the trend of institutionalization is changing the market structure. Over the past year, institutional capital has gradually viewed BTC as an independent asset class in its allocation strategy, rather than purely a speculative item. This has led capital to prefer to concentrate on assets with clear attributes and stable value propositions, rather than chasing high-risk tokens. This factor means that altcoins may significantly underperform BTC or ETH even during market recovery phases. Meanwhile, changes in the stablecoin market size, distribution of derivatives liquidity, and changes in exchange funding rates will become important indicators for judging capital direction, and these indicators currently do not clearly point to a strong cycle initiation in the short term. In terms of risk, the uncertain factors affecting market trends remain significant. First, the global interest rate cycle has not yet clearly reversed; if monetary policy expectations fall short, risk assets may come under pressure. Second, if a technical rebound lacks trading volume support, it is prone to form a "fragile rise" and may quickly decline when facing macro news shocks. Additionally, the altcoin market still faces systemic risks, especially in the absence of risk appetite and capital support, which can easily amplify volatility. More importantly, the cryptocurrency market has experienced a rapid phase of "valuation repair + new price highs" over the past year, and in this context, investors are often more sensitive to new risk-reward ratios, making it difficult for the market to form a consistent trend consensus.

In summary, the current cryptocurrency market is at a critical stage of structural repair and trend judgment. BTC's rebound reflects the market's transition from panic to repair, but it does not yet prove the comprehensive recovery of a bull market cycle. If prices break through key resistance and gain volume support, the market may enter a new round of trend development and have the opportunity to form a longer-term price range reshaping; if the rebound strength is insufficient or macro pressures increase again, it may return to the bottom range for retesting. The performance of the ETH and altcoin markets is highly dependent on BTC's stability and the continuity of capital flow, rather than being driven independently. In the coming period, the market will still revolve around structural adjustments, changes in macro expectations, and fluctuations in risk appetite, and the trend direction will only gradually become clear after key range breakthroughs and capital confirmations.

2. Analysis of Structural Opportunities and Risks in the Macroeconomic Environment

When assessing whether the current rebound in crypto assets has sustainability, relying solely on price behavior, technical signals, or short-term emotional recovery is insufficient to build a long-term logic. The future direction of the market depends more on the institutional environment, capital structure, macro policy direction, and the evolution of the capital cycle itself, which may constitute structural opportunities or harbor potential risks. In recent years, as the relationship between the cryptocurrency market and traditional financial markets has deepened, its price behavior has increasingly been driven by macro liquidity and policy expectations. This means that Bitcoin's valuation logic is no longer an isolated "crypto-native logic," but is gradually linked to interest rate cycles, inflation trends, asset allocation preferences, and even institutional risk budgets.

Recent research shows that the correlation between Bitcoin and traditional financial market indices is strengthening, indicating that crypto assets are gradually transitioning from "marginal speculative assets" to "mainstream financial assets," with institutions playing a key role in this process. When Bitcoin shows a high correlation with the S&P 500 or Nasdaq, it means that the market's risk pricing logic has changed: it is no longer an independent category decoupled from the macro cycle but has become a component of the risk asset basket. This change reduces Bitcoin's diversification effect as an "alternative asset," but on the other hand, enhances its attractiveness as a "configurable asset." Especially when institutional investors, ETFs, pensions, or large asset managers begin to intervene, the capital pool capacity for crypto assets may experience structural expansion, making the market no longer solely reliant on retail sentiment fluctuations. Behind the changes in capital structure, behaviors such as ETF capital inflows, improved custody infrastructure, and the establishment of compliance and reporting systems may redefine valuation ranges and risk premium structures. This not only means that crypto assets have gained broader sources of funding but may also push their volatility and risk-return structures closer to traditional assets. Particularly in the context of improving macro liquidity and increasing expectations of interest rate declines, institutional capital may incorporate crypto assets as "part of the risk asset exposure" into strategic allocation frameworks, rather than viewing them as short-term trading targets. In this scenario, market uptrends can have a deeper capital foundation rather than relying solely on exchange rollovers and retail chasing. If this mechanism holds, it will have far-reaching implications for future cycles. However, institutionalization and financialization do not mean the end of market risks; rather, they may bring new structural risks. If Bitcoin's risk attributes are closer to high-beta assets, then when the market experiences liquidity tightening and declining risk appetite, the crypto market will be more susceptible to macro systemic shocks. In traditional financial markets, such assets typically perform weakly in down cycles, and if crypto assets synchronize with them, it means an expansion of risk exposure rather than convergence. This "institutionalization brings pro-cyclical risks" structure is an important issue that future market operations need to pay attention to.

3. Future Outlook for the Macroeconomic Cryptocurrency Market

After experiencing a significant rebound in the past few weeks, the cryptocurrency market has entered a strategic observation window filled with uncertainty. Bitcoin has re-stabilized around the $90,000 mark and has tested higher levels, with market sentiment recovering from extreme pessimism to cautious optimism. However, whether the rebound can continue, whether a trend can form, and whether the market has sustainable upward momentum still depend on multiple driving factors such as capital structure, macro variables, policy changes, and market participant behavior. Considering the current environment, historical patterns, and market structure characteristics, various evolutionary paths for the cryptocurrency market may emerge in the next three to six months, each relying on specific triggering conditions and behavioral feedback mechanisms.

One possible path is for the current rebound to continue and further amplify, guiding prices to test the $95,000 to $100,000 range. This scenario often occurs during phases when market sentiment continues to recover, trading volume increases, and both institutional and retail capital flow in simultaneously, forming a consistent directional expectation in the market. If macro liquidity improves, monetary policy shifts to easing, and risk appetite rises, and if Bitcoin can break through key resistance areas, a secondary acceleration trend structure may form. In this state, prices will not only rely on technical momentum but will also be influenced by capital drives and structural valuation repairs. Another possible path is for Bitcoin to oscillate and consolidate repeatedly in the $92,000 to $95,000 range, struggling to form a sustained upward trend. This situation typically occurs when market confidence is restored but capital inflows are unstable, macro policy expectations are ambiguous, and bulls are unable to break through key resistance. In this state, price fluctuations are driven by short-term trading, and market participant behavior exhibits hesitation and game-like characteristics. If capital lacks sustained reinforcement, with institutions on the sidelines, retail cautious, and derivatives market leverage neutral or low, prices are more likely to maintain range-bound oscillation rather than trend breakthroughs. The third path is for the market to pull back again, with prices retesting support levels or even undergoing deeper adjustments, with target ranges possibly around $85,000 to $88,000. This situation is often triggered by macro risks, changes in the policy environment, or reversals in market expectations. For example, a resurgence of inflation leading to rising interest rate expectations, a hawkish shift in central bank policy tone, geopolitical risks triggering safe-haven demand, tightening market liquidity, increasing regulatory risks, or capital outflows from institutional channels such as ETFs could all reshape risk appetite.

For altcoins or high-risk asset categories, although the rebound may bring short-term opportunities, the risk levels are significantly higher than those of Bitcoin and Ethereum. Due to their fragile valuation systems, insufficient liquidity, strong speculative nature, and clear narrative-driven characteristics, altcoins often experience larger declines and slower recoveries when the market undergoes structural adjustments. Therefore, only investors with a high risk tolerance, deep understanding of projects, and short-term trading strategies may operate in this field, while ordinary investors should remain cautious in periods of unclear trends.

Overall, while the short-term rebound in the cryptocurrency market is strong, the trend has not yet been confirmed. Whether prices can break through resistance, oscillate and consolidate, or pull back again will depend on macroeconomic data, policy signals, institutional capital flows, and market behavior feedback in the coming weeks. The rebound phase is prone to generate optimistic sentiment and high return expectations, but the market is still embedded with liquidity risks, regulatory risks, and structural vulnerabilities, and any sudden events could change the trend direction. Before the trend is confirmed, optimism needs to be built on caution, and the approach to participating in the market should focus on flexibility and risk management rather than premature predictions of a new cycle.

4. Conclusion

In summary, this round of rebound has significantly improved market sentiment on an emotional level, reshaped key support on a technical level, and released potential participation willingness on a capital level, but there is still a phase distance from a trend-driven bull market. The market is currently in a transitional period of "repair---test---wait," and whether the upward momentum can be transformed into a trend breakthrough will depend on the direction of macro policies, the sustainability of capital inflows, and the re-pricing process of market participants regarding risk in the coming weeks. For investors with risk tolerance, phased layout and flexible allocation may have certain strategic value at this stage, but it must be premised on strict position control and risk management. From a long-term perspective, if the rhythm of capital entry continues to strengthen, the macro environment gradually improves, and Bitcoin achieves a breakthrough of key resistance, then a new round of structural rise is realistically possible; conversely, the market may still face oscillation and pullback. Cautious participation and rational judgment will be the main methodology to navigate through uncertainty.