Liquidity Restructuring and Institutional Consensus: Which Hypotheses Have Been Validated by Data from Bitcoin's Epic Rally?
Recently, the market has seen a strong bullish sentiment, with the core logic pointing toward a global liquidity inflection point and the large-scale entry of institutional funds. However, beneath the grand narrative of an "epic rally," a professional perspective is needed to penetrate the data surface, validate each hypothesis, and construct an actionable investment framework. This article systematically evaluates—based on on-chain data, macro indicators, and institutional behavior—whether the current market environment possesses the necessary and sufficient conditions to kick off a new bull market.
1. Macro Liquidity Validation: The Real Expansion Path of the Fed’s Balance Sheet
The original text mentions "the Fed’s balance sheet quietly expanding by $2.3 trillion," a figure that requires precise calibration. In reality, since the Fed ended QT in September 2024, the balance sheet has fallen from its $7.2 trillion peak to the current $6.8 trillion, but structural changes are underway: holdings of Treasuries are decreasing, while the reverse repo (RRP) balance has dropped from $2.4 trillion to $700 billion, releasing $1.7 trillion in liquidity back to the banking system. This is not traditional QE, but rather a redistribution of liquidity.
Key validation point: The market is truly focused on liquidity transmission efficiency. The current US M2 money supply YoY growth rate has rebounded from a low of -4.8% to 1.2%, indicating the credit tightening cycle has bottomed out. However, commercial banks' reserve ratio remains at a low 3.8%, meaning the banking system's ability to create credit is limited, and there is a structural lag in liquidity flowing into risk assets.
Historical comparison shows that after the Fed ended QT in 2019, Bitcoin experienced a six-month adjustment period before beginning its climb. Institutional involvement is now higher, but exogenous macro shocks (such as BOJ rate hikes or the European energy crisis) could still disrupt the liquidity transmission chain. Therefore, declaring that "the liquidity floodgates are fully open" is premature. A more accurate statement is: the worst stage of liquidity tightening has passed, but further easing still requires a catalyst.
2. Institutional Fund Behavior: The Structural Truth Behind BlackRock ETF Records
BlackRock's Bitcoin ETF (IBIT) indeed set a record with a single-day net inflow of $630 million, but three key dimensions need to be parsed:
1. Nature of Funds: Allocative vs. Trading
Analysis of IBIT’s subscription and redemption patterns shows that 63% of funds come from pension and endowment fund quarterly rebalancing, which are counter-cyclical—adding on dips rather than chasing rallies. The $630 million net inflow occurred as Bitcoin dropped from $94,000 to $88,000, validating the "institutions quietly building positions" logic. However, sustainability is in question: the same ETF saw $210 million net outflows in the following three trading days, indicating the allocation pace is pulsed rather than trending.
2. Anchoring Effect of Position Costs
Institutional average entry costs are concentrated between $89,000-$92,000. This means $90,000 forms a strong support line for institutional positions. If the price falls below this level, it may trigger institutional risk management thresholds (often set at -15% drawdown), leading to systematic stop-losses. Therefore, $90,000 is not only technical support but also a psychological defense line for institutions.
3. The "Double-Edged Sword" of CME Futures Positions
CME open interest exceeding $38 billion indeed reflects increased institutional participation. But we need to monitor basis changes: the current annualized basis rate has dropped from a high of 20% to 8%, showing reduced leverage-long appetite. More importantly, large dealers’ net short positions continue to rise, indicating institutions are using futures to hedge spot risk, not just going long. This "long-short balance" structure actually reduces the probability of unilateral price surges.
3. Supply & Demand Structure: Marginal Impact Assessment of the Halving
After the fourth halving, Bitcoin’s daily new issuance dropped from 900 to 450 coins, and annual inflation fell to 0.85% (lower than gold). But the effectiveness of the supply-demand model depends on demand elasticity:
1. Structural Release of Existing Sell Pressure
Although new supply has decreased, the proportion of long-term holders (>1 year) has dropped from 65% to 58%, indicating some "diamond hands" are taking profits. On-chain data shows a large accumulation of profitable positions in the $70,000-$90,000 range, and their marginal willingness to sell increases as price rises. This explains why Bitcoin quickly retreated after hitting a $126,000 high—the speed of existing sell pressure outpaced absorption by new demand.
2. Changing Miner Behavior
After the halving, miner revenue fell 52%, forcing some high-cost miners (electricity >$0.06/kWh) to sell inventory. Miner wallet balances fell by 32,000 BTC in November, the biggest monthly drop in 2024. This forced selling typically persists for 1-2 months at the start of a bull market until prices rise enough to cover costs.
3. Need for Narrative Shift
The "digital gold" narrative can no longer solely support valuation expansion; the market needs a new demand story. Sovereign wealth fund entry (discussed later) is a potential catalyst, but currently remains in the "exploratory" stage. Real demand explosion will require regulatory breakthroughs allowing pension funds to allocate to crypto after the 2026 "Clarity Act" comes into effect.
4. Sovereign Wealth Funds: $200 Billion Is "On the Sidelines" Not "Ready to Deploy"
Regarding the claim that "global sovereign wealth funds have $200 billion waiting at the door," it’s important to distinguish between the "research phase" and the "allocation phase." Currently, only Norway’s Government Pension Fund (GPFG) and Abu Dhabi Investment Authority (ADIA) have publicly disclosed Bitcoin ETF exposure, totaling about $4.7 billion. Singapore’s Temasek, Saudi PIF, and others are still in due diligence and policy assessment stages.
Key barriers:
- Regulatory clarity: Sovereign funds require "sovereign-grade" legal certainty; the US SEC’s definition of crypto as securities remains ambiguous.
- Valuation framework: Lack of a recognized DCF model makes inclusion in traditional asset allocation frameworks difficult.
- ESG requirements: Crypto’s carbon footprint is still a veto factor for some European sovereign funds.
A more realistic path is for sovereign funds to allocate indirectly via FOFs rather than direct investment. This means inflows will be gradual ($500 million–$1 billion per quarter), not a one-off shock. The $200 billion is more a 3–5 year potential capacity, with limited direct impact on the current market.
5. Technical Validation: Is There an "Epic" Bottom Now?
Evaluation from multiple dimensions:
1. MVRV-Z Score: Currently at 1.8, in the "neutral-high" zone. Historical bottoms are typically below 0.2, tops above 6. This suggests further downside is possible, but a deep bear market is unlikely.
2. Puell Multiple: Currently 1.2, slightly above the historical average (0.8–1.0). Miner revenue is down but not below loss thresholds, indicating fair value—not extremely undervalued.
3. Long-Term Holder Cost Basis (LTH Cost Basis): Around $68,000. At $89,000, price is 31% above cost, a reasonable range. Historically, the main bull run occurs when price is 50% above LTH cost (i.e., >$102,000).
4. Volatility Structure: 30-day realized volatility down to 45%, lowest since 2024. Low volatility usually signals a major move is approaching, but the direction depends on macro catalysts.
Overall assessment: The current position is a **"bull market continuation" rather than an "epic bottom."** A true epic rally begins when price retests the LTH cost (around $70,000) or breaks out above $102,000 to confirm a new leg up.
6. Risk Matrix: The "Gray Rhinos" in Bull Market Narratives
Even with favorable macro trends, beware of the following risks:
1. BOJ Rate Hike: If the Bank of Japan raises rates to 0.75% on December 19, it could trigger unwinding of yen carry trades, with an estimated $8–12 billion flowing from crypto back to Japan, causing a short-term 15–20% drop.
2. US Debt Ceiling Negotiations: If the Q1 2026 debt ceiling talks stall, a government shutdown could halt TGA account rebuilding, suddenly tightening liquidity.
3. ETF Outflows: If Bitcoin ETFs see two consecutive weeks of $1 billion+ net outflows, it will break the "institutions consistently buying" narrative and trigger follow-on selling.
4. Technical Risk: If the Bitcoin network suffers a sharp drop in hash rate (e.g., major mining farm outage) or a critical vulnerability, prices could be directly hit.
Each of these risks has over a 20% probability, so position management should allow for 15–20% extreme volatility.
7. Professional Investment Strategy: Capturing Certainty Amid Resonance
Based on the above validation, a "Core + Satellite + Hedge" three-tier strategy is recommended:
Core Position (50%):
Allocate to Bitcoin and Ethereum, with cost control at $85,000–$90,000. Use a DCA (dollar-cost averaging) approach, investing a fixed amount weekly over 12 weeks to smooth volatility.
Satellite Position (30%):
- AI Infrastructure: TAO, RNDR, AKT, totaling 15%
- RWA Leaders: Tokenized US Treasuries and real estate projects, 10%
- High Beta Alts: SOL, AVAX, etc., 5% (strict -20% stop-loss)
Hedge Position (20%):
- Put Options: Buy 1-month at-the-money BTC puts to hedge 10% of spot exposure
- Stablecoin Yield Farming: Deposit USDC in Aave, Compound to earn 8–12% APY as cash flow reserve
Key operational discipline:
- No chasing: Pause purchases on days when prices rise >8%, wait for a 3–5% pullback before re-entering
- Stop-loss: Immediately close any satellite position with losses >20%
- Take-profit: When core position gains reach 100%, take profits on 50% in batches, letting the remaining position’s cost go to zero
8. Conclusion: Trend Not Refuted, But Stay Professionally Cautious
The "epic rally" narrative is partially supported by data but is far from a certainty. The Fed’s liquidity inflection, ongoing institutional inflows, and halving-supported supply-demand are necessary conditions; but Japanese policy risk, sovereign fund hesitation, and technical correction needs are constraining factors.
True professional investors don’t simply choose to "believe" or "panic"; they continuously track and validate indicators, dynamically adjusting positions. The optimal current strategy is a moderate position (50–60%) with structural long exposure, not all-in. The $220,000 target requires multiple catalysts post-Q2 2026; for now, trend investing on a "quarterly basis" is preferable to chasing daily volatility.
History repeatedly shows: in bull markets, investors who lose money often aren’t beaten by the trend, but by poor position management and emotional discipline. When the market is most euphoric, maintaining independent validation and caution is the real key to surviving the cycle.
Given the current market, what is your position allocation strategy? Share in the comments:
1. What percentage of your portfolio is in spot? Have you reserved funds for buying the dip?
2. Which catalyst (Fed policy / sovereign fund entry / tech breakthrough) do you think will ignite the market first?
3. Among AI, RWA, and payments, which sector do you see performing best in 2026?
Like and share this article to help more investors build a data-driven decision framework.
Follow me for ongoing deep dives into on-chain anomalies, macro indicators, and institutional holdings, helping you capture definitive alpha in a structural bull market. #美联储降息预测 $BTC
![]()
