Huobi Growth Academy | Cryptocurrency Market Macro Report: Key Window for Macro Liquidity, Institutionalization, and Risk Repricing

Summary

Recently, the crypto market has experienced a significant rebound. Bitcoin surged past $94,000, regaining a key range, with sentiment and liquidity seeing a temporary recovery. However, this rebound has mainly been driven by improved macro liquidity expectations, capital returning after panic selling, and a technical bounce. This is not sufficient to prove the systematic start of a bull market. The medium-term trend will depend on the implementation of macro policies, capital flows, and the evolution of market structure. The market might continue to break new highs, consolidate at elevated levels, or retrace under policy and liquidity pressures. Institutionalization has increased long-term potential but also made Bitcoin more sensitive to systemic risks, intensifying pro-cyclical volatility. The altcoin market remains constrained and in a high-risk structure. With the trend still unconfirmed, the market is in a “repair—test—wait” stage, requiring both optimism and caution. If trading volume and policy environment continue to improve, a new growth cycle is possible; if expectations fail, the rebound may reverse. Overall, flexible participation and risk management remain the core strategies to navigate uncertainty.

I. Macro Overview of the Crypto Market

Over the past few weeks, after a sharp correction, the cryptocurrency market has seen a significant recovery in both sentiment and price. As the market benchmark, BTC once dropped to $80,000, sparking widespread panic, forced liquidations of high-leverage positions, and a swift decline in short-term risk appetite. However, due to shifts in macro expectations and market structural responses, BTC quickly rebounded recently, returning above $94,000 with a 24-hour increase of 7–8%, according to multiple institutional platforms. This price action reflects both a moderation of the earlier downtrend and an attempt by the market to undergo structural repair from extreme pessimism. The current rebound is not driven by a single factor but by a combination of macro liquidity, market structure changes, technical conditions, and capital behavior. From a macro perspective, global monetary policy expectations have become critical variables affecting risk assets. The market’s anticipation of upcoming rate cut cycles by major central banks, and strengthened expectations of marginal liquidity improvements, have brought risk assets back into focus. The November PPI data came in much lower than expected, inflationary pressures continued to ease, and Fed officials repeatedly emphasized a “soft landing” as the core goal through 2026, avoiding premature tightening. According to the latest CME FedWatch data, the probability of a 25-basis-point Fed rate cut on December 10 has soared from 35% a week ago to 89.2%. Separately, on December 1, the Fed officially announced the end of Quantitative Tightening (QT). That same day, the crypto market saw a collective surge. Historically, both US equities and BTC have performed better during periods of monetary easing or expectations thereof, which is the turning sentiment currently reflected in the market. While macro policy has yet to clearly reverse, expectations alone are sufficient to drive asset prices. Additionally, with high interest rates pressuring the real economy, the market tends to price in policy pivots in advance, providing risk assets more room for imagination.

Second, from the perspective of market structure and capital flows, this rebound exhibits a classic “panic washout + institutional bottom fishing” pattern. During the prior downturn, exchange data showed forced liquidations of large high-leverage longs and some shorts, releasing liquidity in a concentrated fashion. Historically, such phases are often accompanied by exaggerated directionality and extreme sentiment, with capital flows changing course accordingly. Some long-term capital positioned itself after steep declines, creating support in the bottom range. Also, as shorts become concentrated, the rebound can trigger “short squeezes,” further driving up prices and accelerating the pace of the rally—forming a typical “structural squeeze + capital reversal” rebound mode. Technical analysis also explains the rebound: BTC repeatedly tested and held support in the $86,000–$88,000 region, which became a bottom and area of heavy position concentration. The rapid short-term rebound is also related to prior overselling. When technicals form support and capital inflows are added, this usually leads to improved momentum and a shift in trading behavior. The latest price action has shown synchronized increases in trading volume and key price breakouts, indicating that some buying interest is proactive rather than solely driven by short covering. However, overall market volume does not yet show the characteristics of a confirmed long-term trend, so this rebound remains in an observation window and needs further verification to establish a higher structure.

Beyond BTC’s recovery, the market is also watching whether the rebound will lead to correlated moves in ETH and the altcoin market. The Fusaka upgrade activated on December 4 is another major milestone for post-merge Ethereum. Its core PeerDAS technology increases blob capacity from 9 to 15, enabling Layer 2 transaction fees to drop another 30%-50%, and for the first time allows regular accounts to have features like social recovery and batch operations via “account abstraction (AA)”. This upgrade not only optimizes data availability management but, more crucially, lays the groundwork for Verkle Trees stateless clients, reducing node sync time from weeks to hours. Historically, every crypto market rebound has featured a capital migration from mainstream assets → secondary assets → high-risk assets. The stabilization and rebound of the ETH/BTC ratio suggests a possible rotation of capital from Bitcoin to altcoins. However, this migration requires certain conditions: first, risk appetite must continue to improve, not just bounce temporarily; second, the market must have sufficient liquidity, not just be driven by short-term trading; third, mainstream asset trends must stabilize rather than remain highly volatile and directionless. The current BTC rebound, while repairing market sentiment, has also drawn some capital attention to ETH and large-cap altcoins. ETH rose in tandem during this rebound and regained its key range, which is positive for market confidence.

It is worth noting that institutionalization is changing market structure. Over the past year, institutional capital has increasingly treated BTC as a standalone asset class rather than a pure speculative instrument. This has led capital to focus more on assets with clear properties and stable value propositions, rather than chasing high-risk tokens. As a result, even during recovery phases, altcoins may significantly underperform BTC or ETH. Meanwhile, changes in the stablecoin market cap, derivatives liquidity distribution, and exchange funding rates will be key indicators for tracking capital flows, though these are not yet clearly pointing to a strong new cycle in the short term. On the risk side, uncertainties remain significant. First, the global interest rate cycle has yet to clearly reverse, and if monetary policy expectations are disappointed, risk assets could come under pressure. Second, if technical rebounds lack volume support, they can become “fragile rallies” that quickly reverse when hit by macro news. Furthermore, the altcoin market still faces systemic risks, especially in the absence of risk appetite and capital absorption, making volatility more pronounced. More importantly, after a year of “valuation repair + new price highs,” investors are more sensitive to new risk/reward ratios, preventing the market from forming a consensus on trend direction.

In summary, the current crypto market is at a key stage of structural repair and trend assessment. BTC’s rebound reflects a move from panic to recovery, but does not yet prove a full bull cycle is underway. If prices break key resistance with volume confirmation, the market may enter a new trend phase and reshape long-term price ranges; if the rebound is weak, or macro pressures return, it could retest lower ranges. The performance of ETH and altcoins heavily depends on BTC’s stability and continued capital flows, not independent drivers. In the coming period, the market will continue to focus on structural adjustments, macro expectation changes, and risk appetite fluctuations, with trend direction only becoming clear after key range breakouts and capital confirmation.

II. Analysis of Macro Structural Opportunities and Risks

When assessing whether the current crypto asset rebound is sustainable, relying solely on price action, technical signals, or short-term sentiment repair is insufficient to build a long-term thesis. The future direction of the market depends more on institutional environment, capital structure, macro policy direction, and the evolution of the capital cycle itself. These factors can present structural opportunities or breed potential risks. In recent years, as the relationship between the crypto market and traditional financial markets has deepened, price action has become increasingly driven by macro liquidity and policy expectations. This means Bitcoin’s valuation logic is no longer an isolated “crypto-native logic,” but is increasingly tied 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 indices is increasing, signaling that crypto assets are shifting from “marginal speculative assets” to “mainstream financial assets,” with institutional adoption playing a key role. As Bitcoin becomes more correlated to the S&P 500 or Nasdaq, it suggests a change in its risk pricing logic: it is no longer an uncorrelated, standalone asset class, but a component of the risk asset basket. This change both reduces Bitcoin’s diversification effect as an “alternative asset” and increases its attractiveness as an “allocatable asset.” Especially as institutional investors, ETFs, pension funds, or major asset managers get involved, the capital pool for crypto assets may structurally expand, making the market less dependent on retail-driven sentiment swings. Behind these changes, ETF inflows, improved custody infrastructure, and the establishment of compliance and reporting systems may redefine valuation ranges and risk premium structures. This not only means crypto assets have access to broader capital sources, but may also push their volatility and risk/reward structures closer to those of traditional assets. Particularly with improved macro liquidity and heightened expectations of lower rates, institutional capital may include crypto assets as “part of risk asset exposure” in strategic allocation frameworks, rather than as short-term trading vehicles. In this scenario, market rallies can have a deeper capital base rather than relying solely on exchanges and retail momentum. If this mechanism holds, it will have profound effects on future cycles. However, institutionalization and financialization do not spell the end of market risk—on the contrary, they may create new structural risks. If Bitcoin’s risk profile becomes more like that of high-beta assets, when liquidity tightens or risk appetite wanes, the crypto market will be more exposed to macro shocks. In traditional finance, such assets tend to perform poorly in downturns, and if crypto moves in sync, risk exposure expands rather than contracts. This “institutionalization induces pro-cyclical risk” structure is an important issue for future market operation.

III. Crypto Macro Market Outlook

After several weeks of significant rebound, the crypto market has entered a strategic observation window filled with uncertainty. Bitcoin has stabilized above $90,000, even testing higher levels, with market sentiment recovering from extreme pessimism to cautious optimism. However, whether the rebound can be sustained, a new trend established, and the market can muster sustainable upward momentum all depend on a variety of drivers: capital structure, macro variables, policy changes, and market participant behavior. Combining current conditions, historical patterns, and market structure, several evolutionary paths may emerge for the crypto market over the next three to six months, each depending on specific trigger conditions and feedback mechanisms.

One possible path is the ongoing and amplified rebound, leading prices to test the $95,000–$100,000 range. This scenario typically occurs when sentiment continues to recover, trading volume rises, institutional and retail capital flow in together, and the market forms a consensus directional expectation. If macro liquidity improves, monetary policy turns dovish, risk appetite rises, and Bitcoin can break key resistance, a second acceleration phase could form. In this case, prices are driven not only by technical momentum but also by capital inflows and structural valuation repair. Another path is that Bitcoin consolidates between $92,000–$95,000, struggling to sustain upward momentum. This usually happens when confidence recovers but capital inflows are unstable, macro policy expectations are unclear, and bulls fail to break key resistance. Here, price volatility is driven by short-term trading and market participants are hesitant and tactical. Without sustained capital reinforcement, with institutions on the sidelines, retail cautious, and derivatives leverage neutral or low, prices are more likely to stay in a range than break out. A third path is for the market to pull back again, with prices retesting support or seeing a deeper correction, possibly toward the $85,000–$88,000 area. This is typically triggered by macro risks, policy changes, or a reversal in market expectations. For example, a resurgence in inflation pushing rate expectations higher, central banks turning hawkish, geopolitical risks driving safe-haven demand, liquidity tightening, heightened regulatory risk, or ETF/institutional outflows—any of these could reshape risk appetite.

For altcoins or high-risk asset classes, while rebounds may offer short-term opportunities, risk levels are significantly higher than for Bitcoin and Ethereum. Their valuation systems are fragile, liquidity insufficient, highly speculative, and narrative-driven. When the market sees structural adjustments, altcoins often drop further and recover more slowly. Only investors with a high risk tolerance, deep project understanding, and short-term trading strategies should operate in this sector, while regular investors should remain cautious in uncertain trend phases.

Overall, while the short-term crypto rebound has been strong, the trend is not yet confirmed. Whether prices break out, consolidate, or retrace will depend on macro data, policy signals, institutional capital flows, and market feedback in the coming weeks. The rebound phase often brings optimism and high return expectations, but the market remains fraught with liquidity risk, regulatory risk, and structural fragility—any shock may alter the trend. Until the trend is confirmed, optimism should be built on caution, and market participation should center on flexibility and risk management, not premature bets on a new cycle.

IV. Conclusion

Overall, this rebound has significantly improved market sentiment, rebuilt key technical support, and released latent participation willingness from a capital perspective, but there is still some distance from a true bull market. The market is currently in a “repair—test—wait” transition period. Whether upward momentum can translate into a trend breakout will depend on macro policy direction, sustained capital inflows, and the market’s re-pricing of risk in the coming weeks. For investors with risk tolerance, phased positioning and flexible allocation may offer strategic value at this stage, but only if coupled with strict position control and risk management. In the long run, if capital inflows continue to strengthen, the macro environment gradually improves, and Bitcoin breaks through key resistance, a new structural bull run is possible; otherwise, the market may still face consolidation and retracement. Prudent participation and rational judgment will be the main methodologies for navigating uncertainty.