Disclaimer: This is not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results.

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Executive Summary

This week's analysis reveals signs of seller exhaustion in the market. While long-term holders continue to reduce their positions, ETF flows have shifted from significant outflows to a more neutral stance. 

Yesterday's sharp move from $86K to $91K was notable, though the underlying flow data suggests this may be more positioning-driven than fundamentally backed. With the Fed meeting on December 10th and key economic data on December 16th, we expect continued volatility and recommend patience rather than chasing current levels.

Flow Analysis: Long-Term Holders & ETFs

Long-Term Holder Behaviour

Long-term holders continue to sell down their positions and are still reducing the total supply they hold at a significant level. This selling pressure remains a headwind for sustained upside momentum.

ETF Flow Dynamics

Yesterday's price action was interesting when examined against ETF flows. Despite the significant move from $86K to $91K, the ETF inflows were modest: $120M into IBIT, $22M into Fidelity, offset by $90M in ARK outflows, netting approximately $58M of inflows. This is decent but not the substantial backing you would expect for such a sharp move.

The positive development is that the large outflows we witnessed in late October and November have now petered out to a more neutral stance. We've transitioned from predominantly large outflows to a mixed, neutral pattern. This shift suggests the major selling pressure from this cohort may be subsiding, though it doesn't guarantee prices will move higher—it simply removes one significant headwind.

Market Interpretation

There's speculation that yesterday's move was driven by exchanges and market makers bidding price up together when the US session started. While this remains unconfirmed, the lack of substantial flow backing suggests the move was more positioning-related than a fundamental shift in demand. 

The key takeaway: those who wanted to sell at current levels may have largely done so, but another bout of selling could emerge around Powell's comments on December 10th or following the data release on December 16th.

Coinbase Premium Analysis

The Coinbase premium, which had been hugely negative during the late October and November selloffs, has now returned to neutral-to-slightly-positive territory. This is an encouraging sign that US-based selling pressure has eased.

Looking at the 12-hour timeframe, we can draw parallels to the 'tariff tantrum' period where we saw positive premium, followed by negative readings, then choppy action before a flip. During that period, price moved from $81K up to $87K, then down to $76K. We may be seeing a similar pattern play out now at a higher level, potentially ranging between $80K and $96-97K. If we get hawkish Fed guidance into 2026, expect another bout of negative premium that could bring prices into the low $80s or potentially high $70s.

Federal Reserve & Rate Expectations

December 10th Meeting

The market is pricing an 89.2% probability of a rate cut at the December 10th meeting, with only 10.8% odds of a hold. This is now effectively baked in following NY Fed President John Williams' recent comments suggesting he could see a cut in the near future. With the Fed now in a blackout period and no contrary signals leaked through Nick Timiraos at the Wall Street Journal, a cut appears likely.

January Outlook

The key question is forward guidance. Looking at January probabilities: there's a 66.6% chance the Fed holds (pause), a 25% chance of another cut, and 7.7% odds of pauses in both December and January. The consensus expectation is cut in December, pause in January. A hawkish cut—cutting but signalling extended pause—is somewhat priced in, which may explain why markets haven't reacted more positively.

Looking Ahead to 2026

Even if we see hawkish Fed posturing in Q1, the market will begin looking forward to potential changes at the Fed. Kevin Hassett appears likely to be the new Fed chair, and he's known as a dove who favours rate cuts. By March-April, markets may start pricing in policy shifts under new leadership, potentially generating animal spirits. The period between now and late Q1 2026 remains uncertain, but we maintain a bullish medium-term view for positioning in December for a strong 2026, particularly heading into the midterms.

Technical Analysis

Macro Picture

• The Dollar Index (DXY) has broken down, likely driven by Hassett speculation and cross-border flows. Importantly, a falling dollar isn't always positive for risk assets—context matters. 
• The VIX has pulled back, supporting equity markets. 
• SPX, NDX and the Russell have all moved up to local highs, and now consolidating.  

Bitcoin (BTC)

• BTC has put in a higher low, and now a higher high. 
• Price may be able to move up and test the $95k-$98k resistance zone. 
• A hawkish Powell could result in prices retesting the low $80k’s in the short-term. 
• There may be a few more days of upside before Powell speaks next week. 
• If you’re not Long already, we wouldn’t encourage chasing at current prices. 

Ethereum (ETH)

• ETH has also put in a higher low and now a higher high. 
• Price is close to the resistance of $3,200-$3,300. 
• The setup played out well, though faster than expected. 
• This remains a trader's market rather than a spot accumulation zone. If we get new lows with proper bullish divergences, that would be the signal for meaningful position sizing.

Solana (SOL)

• SOL put in a lower low in price and a higher low on the oscillator (bullish divergence).
• Price has now moved into the key horizontal level of $144, although a breakout to $155 is possible. 
• With price just shy of $144 (currently $142) we wouldn’t look to Long into a resistance. 
• Price is currently showing a hidden bearish divergence on the daily (lower high in price, higher high on oscillator), suggesting potential for a pullback, we’ll need to watch the Daily close. 
• Ideally, we'd see a break below range lows with capitulation for a strong accumulation opportunity—that would be a 'buy and close the laptop until March' type of setup.

Hyperliquid (HYPE)

• A double bottom formation, though no classic bullish divergence as the candle bodies printed a higher low. 
• Price is now testing the downtrend resistance line and horizontal resistance at $36, where previous rejections occurred. 
• Today's close will be important for confirming direction.

Key Takeaways & Positioning

Seller exhaustion emerging: Some of the selling appears done. Those who wanted to sell have largely sold, though another bout could come in 2-4 weeks around Fed events.

Relief rally in progress: We're likely in the mid-portion of a relief rally, not the early stages. Chasing for perhaps 5% upside at best isn't compelling.

Trader's market: Current conditions favour traders over spot holders. For long-term accumulation, wait for Bitcoin to reach the mid-$70s to $80K region with proper bullish divergences.

Key dates: December 10th (Fed meeting) and December 16th (economic data) are pivotal. Powell's forward guidance and the subsequent data will determine whether we see another leg down.

December positioning: With book-cleaning typical in late December, sitting tight may be the optimal approach. If you didn't buy the lows, don't chase here.

Medium-term outlook: We remain bullish on 2026 with expectations of supportive fiscal policy as Trump targets midterm success. The bottoming process is likely December-January, with meaningful positioning opportunities emerging for those patient enough to wait.

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