Weekly Podcast for the 3rd week of December — The Double-Edged Sword of Year-End Rebound: Is it a "Gift Rebound" or "Liquidity Withdrawal"?

The cryptocurrency market shows a rebound trend before the end of the year. Altcoins such as Dogecoin and Cardano have surged by double digits, Bitcoin has risen back to the $87,000 mark, and optimistic sentiment is spreading.

However, whether this rebound is merely a temporary seasonal increase or a sign of structural recovery remains uncertain. Focusing on on-chain data, this cycle’s rebound is most likely a cyclical noise resulting from the interplay of large investors’ withdrawals and liquidity restructuring.

This article will explore the essence of this rebound and whether it can continue until 2026.

Price and Asset Structure Analysis: Altcoin Boom and the Underlying Divergence

This week, Bitcoin increased by 3.9%, Ethereum by 7.2%, entering a technical rebound zone. Altcoins such as Dogecoin (+10.5%), Cardano (+8.7%), and Solana (+7.1%) led the market sentiment recovery, but the total cryptocurrency market cap has not yet regained the $3 trillion level, currently at $2.975 trillion.

From the asset structure perspective, the decisive difference lies in the “distribution of holders.” The number of whale addresses holding over 1000 BTC decreased by 3.2%, and addresses holding 100 to 1000 BTC also decreased simultaneously, indicating that large investors are still withdrawing. Conversely, small addresses holding less than 1 BTC are on the rise. This phenomenon suggests that the core of the rebound is supported by retail investors, which hints that the rebound’s fatigue may be accumulating and volatility could re-expand, rather than indicating a strong and sustained trend.

A notable point is the divergence signs in certain sectors. Solana and Ripple have recorded net ETF fund inflows for 11 consecutive trading days, showing increased attention in terms of technical structure and regulatory narratives.

Liquidity Flows: Not Inflows but Redistribution Phase

The total trading volume of stablecoins reached $127 billion, a 6.31% increase from the previous day, confirming some demand for safe assets. However, this is more indicative of short-term risk-averse capital movement rather than a broader market risk appetite revival.

Bitcoin ETFs have experienced two consecutive days of net fund inflows (approximately 67.86 trillion KRW), but Ethereum is experiencing over $500 million in net outflows. Interestingly, Solana and Ripple ETFs continue to see steady fund inflows. This suggests that institutional funds are partially shifting from large assets to small and medium chains.

Overall, this is a limited “drip effect” of fund inflows, characterized by dispersal and reallocation of existing funds rather than an increase in liquidity supply.

Macro Environment and Policy Factors: Has the “Bad News = Good News” formula ended?

This week’s key macro events include the Federal Reserve’s third rate cut and the restart of small-scale asset purchases (similar to quantitative easing). Although interest rates have been lowered, this was already expected by the market, and the hawkish signals issued have limited policy space, signaling market fatigue.

Simultaneously, the slowdown signs in US employment and consumption indicators have become more apparent, with the unemployment rate rising to 4.6%, exceeding the Fed’s forecast of 4.4%. Inflation is rapidly declining and stabilizing, while signs of economic slowdown are becoming clearer.

The market perceives that this trend is shifting from the original “bad news = rate cut expectation = positive” formula to “bad news = recession concerns.” Especially, recent reactions of risk assets including Bitcoin to economic contraction narratives are more sensitive than inflation hedging, indicating a need for strategic adjustments.

Despite the rebound, no structural confidence

The most convincing market judgment this week is that it is a “short-term rebound led by retail investors.” Structurally, since there has been no observed re-entry of large funds or liquidity expansion, the low-liquidity period after Christmas may again pose downside risks.

The key variable for next week is ▶ the liquidity contraction during the Christmas to year-end holiday period. Considering the increased volatility of large institutions during this time (option expirations, position rollovers), there is a need to be cautious of temporary surges and drops.