The macro logic behind the big pump of crypto assets: An analysis of three forward-looking signals

As market participants are still searching for technical explanations for the price fluctuations in the early morning, Bitcoin's strong rise has shifted the focus back to the macro level. This wave of market movement is not a random fluctuation, but rather the result of a triple resonance of US dollar liquidity, inflation expectations, and policy signals. For Crypto Assets investors, understanding the underlying logic that drives the market holds far more long-term value than chasing candlestick patterns.

1. Shift in US Dollar Liquidity: From "Tightening Tail End" to "Easing Eve"

The US dollar index recently fell to a one-week low, driven by a substantial cooling in the job market. The October non-farm payroll data fell short of expectations, combined with the news of layoffs in the tech industry, the market has priced in a 68% probability of a rate cut by the Federal Reserve in December (CME FedWatch data). A more critical signal comes from the Federal Reserve's own liquidity tool - the usage of the Bank Term Funding Program (BTFP) has dropped from a peak of $50 billion to nearly zero, indicating that the banking system's reserves have returned to ample levels and liquidity constraints have been lifted.

The significance of this change lies in the declining "opportunity cost" of dollar assets. As the real interest rate (measured by 10-year TIPS) drops from 1.95% to 1.83%, the relative attractiveness of holding zero-yield assets (such as Bitcoin) increases. Historical data shows that during the banking crisis in March 2023, the TIPS rate plummeted from 1.7% to 1.2%, and BTC rose by 84% within two and a half months. Although we have not reached a crisis level currently, the direction of marginal liquidity improvement is clear, creating the basic conditions for capital inflows into risk assets.

2. The Reboot of the Anti-Inflation Narrative: Consumer Anxiety Transforms into Asset Allocation Behavior

The University of Michigan Consumer Confidence Index has fallen to a three-year low (59.8), with 71% of respondents concerned about future unemployment risks, reflecting the public's deep worries about stagflation. In this environment, a consensus is forming that "holding cash = shrinking purchasing power."

Despite the recent stable performance of traditional safe-haven assets like gold, the liquidity premium and resilience of the crypto market have made it a new choice for institutional allocation. On-chain data shows that the supply of stablecoins (USDT + USDC) increased by $2.3 billion over the past week, with about 40% flowing into exchanges, indicating that funds are "on standby". Compared to gold, the 24/7 trading, programmability, and global settlement convenience of crypto assets are viewed by institutions not as speculative attributes, but as an alternative reserve asset in the digital age.

The subtlety of this logic lies in the fact that it is not based on "Crypto Assets can rise," but rather on "fiat currency purchasing power can fall." When inflation expectations become self-reinforcing, funds naturally flow towards assets with rigid supply and strong liquidity, and the total supply cap of 21 million Bitcoins precisely meets this demand.

Three, the "lead time" of policy expectations: from data improvement to market pricing.

A survey by the New York Federal Reserve shows that U.S. consumer inflation expectations for one year in October have dropped to 3.24%, a decrease of 0.14 percentage points from 3.38% in September. Although the absolute level is still above the Federal Reserve's 2% target, the marginal improvement is enough to excite the market—because it indicates that the Federal Reserve's policy constraints are loosening.

The characteristic of the crypto market is its sensitivity to expectations, which far exceeds that of traditional markets. During the interest rate hike cycle in 2022, BTC had already dropped 35% two months before the first rate hike; now that the interest rate cut cycle has not yet started, institutional funds are already laying out their positions in advance. According to Glassnode data, long-term holders (LTH) who have held their coins for more than a year began to reduce their holdings in late October, while mid-term holders (STH) with holdings of 1-3 months saw an increase of 12%, indicating that smart money is changing hands from long-term holders to trading funds that are sensitive to policies.

This "anticipated front-loading" phenomenon reveals an investment iron rule: when news headlines confirm "Federal Reserve interest rate cuts," the market has already priced in a 70% rise. The real excess returns come from intervening during the "quantitative change" phase of data improvement, rather than waiting for the "qualitative change" moment when policies are introduced.

4. Executable Investment Framework: From Signal Identification to Position Management

Based on the above logic, investors can establish a three-step decision chain of "macro signals → capital validation → technical confirmation:"

Step 1: Monitor the US dollar liquidity indicators

• Daily Must-Watch: US Dollar Index (DXY), 10-Year TIPS Real Yield, Federal Reserve Reverse Repo Balance (ON RRP)

• Signal Strength: DXY breaks below 103, TIPS rates fall below 1.80%, ON RRP drops below $500 billion, forming a bullish signal combination.

Step 2: Verify the on-chain flow of funds

• Focus on data: net inflow of stablecoins to exchanges, changes in BTC/ETH exchange balances, movements of whale addresses

• Confirmation criteria: Net inflow of stablecoins exceeds 200 million USD for 3 consecutive days, and the exchange's BTC balance decreases, which is seen as capital accumulation.

Step three: Wait for the technical signal resonance.

• Entry Timing: 4-hour RSI rises from the oversold zone (<30) to above 45, and MACD shows a bullish divergence.

• Positioning Principle: After confirming macro signals, initial position is 30%; after technical signal resonance, increase to 50%; after breaking through key resistance level (BTC 98,000 USD), increase position by another 20%.

Risk Control Red Line

• Leverage Limit: During the policy game, the contract leverage does not exceed 3 times.

• Stop Loss Discipline: If a single loss exceeds 2% of the total position, immediately pause trading for 24 hours.

• Emotional Isolation: When the Fear and Greed Index > 70, forcibly reduce positions by 50%; when the index < 25, do not blindly bottom-fish.

V. Historical Reflection: Insights from the Monetary Easing Cycle of 2020

From March 2020 to November 2021, the Federal Reserve expanded its balance sheet by $4.2 trillion, and BTC rose from $3,800 to $69,000, an increase of 17 times. However, three major differences should be noted:

• Different starting points: In 2020, the market value of BTC was only 150 billion USD, and now it has reached 2 trillion USD, making the rise driven by the same amount of funds incomparable.

• Institutional share: In 2020, retail investors dominated the market with high volatility; currently, institutional holdings exceed 55%, market efficiency has improved, and the "expectation gap" opportunities have decreased.

• Interest Rate Environment: Zero interest rates in 2020, and now the interest rates remain high at 4%, restricting the level of leverage due to funding costs.

Therefore, even if part of the 20 trillion dollar stimulus expectations materialize, the rise potential of BTC may be limited to 3-5 times (i.e., 300,000-500,000 dollars), rather than reproducing the myth of 17 times.

6. Conclusion: Cognition is the only weapon to traverse cycles.

After every big pump, the market goes through a cycle of "missing out anxiety → chasing the rise and getting trapped → cutting losses and exiting." The solution lies in establishing a cognitive system based on macro signals, rather than relying on K-line patterns for "rearview mirror trading."

The charm of the crypto market lies in its ability to compress the logic that traditional finance takes months to convey into just a few days. However, this also means that the expectation window is extremely short and the cognitive barriers are very high. While most people are still deciphering "why it rises," those who understand "why it rises now" have already positioned themselves for the next node.

Instead of asking "Can I still chase it now?", it is better to spend 10 minutes each day tracking the US dollar index, TIPS rates, and consumer confidence index. These seemingly dull macro data are the real guiding indicators that determine the flow of funds. When they align again, you will no longer be a bystander awakened by the market at three in the morning, helplessly slapping your thigh, but a participant standing at the starting point of the trend in advance. #Gate10月透明度报告出炉

Disclaimer: This analysis is based on publicly available market data and historical statistics and does not constitute investment advice. The Crypto Assets market is highly volatile, please carefully assess your personal risk tolerance and manage your positions and risk isolation.