Bitcoin’s price movement remains relatively calm as it approaches the Federal Reserve’s final policy announcement of the year, yet beneath this surface tranquility lies a complex and tense market environment.
What seems like a stable trading range actually masks significant stress within the ecosystem. On-chain analytics reveal that investors are enduring nearly $500 million in daily losses, leverage across futures markets has been drastically curtailed, and close to 6.5 million BTC are currently held at unrealized losses.
This scenario mirrors the late phases of previous market downturns rather than a simple period of consolidation.
Still, Bitcoin often undergoes structural adjustments beneath an apparently steady exterior; however, the timing here is particularly noteworthy.
The internal market capitulation coincides with a pivotal moment in U.S. monetary policy. The Fed has just concluded its most aggressive balance sheet reduction phase in over ten years, with expectations mounting for December’s meeting to clarify plans for transitioning toward rebuilding reserves.
This convergence of on-chain distress and an impending liquidity shift sets the stage for key macroeconomic developments this week.
The Shift in Liquidity
As reported by Financial Times, Quantitative Tightening officially ended on December 1st after shrinking the Federal Reserve’s balance sheet by approximately $2.4 trillion during this cycle.
This contraction has pushed bank reserves down to levels historically linked with funding pressures while causing periodic spikes in the Secured Overnight Financing Rate (SOFR) near its upper policy limits.
These signs point toward a financial system moving away from abundant liquidity toward conditions where reserve scarcity becomes increasingly problematic.
In this context, investors’ attention will focus less on an anticipated 25-basis-point rate cut at the upcoming FOMC meeting and more on how policymakers intend to manage their balance sheet going forward.
The Fed is expected either explicitly or implicitly through operational guidance to reveal strategies related to Reserve Management Purchases (RMP).
Evercore ISI projects that RMP could commence as soon as January 2026 involving monthly Treasury bill acquisitions around $35 billion—reinvesting proceeds from mortgage-backed securities into shorter-term assets instead of allowing runoff without replacement.
The details matter: although RMP won’t be framed as monetary stimulus per se, reinvesting into short-duration bills steadily replenishes reserves while shortening maturity profiles within the System Open Market Account (SOMA).
This process would incrementally increase reserves leading to an annualized expansion exceeding $400 billion—a notable pivot marking Bitcoin’s first sustained liquidity boost since QT began—and historically Bitcoin prices have correlated more closely with these liquidity cycles than mere interest rate changes alone do.
A Turning Point in Monetary Conditions
Broad money supply metrics further support signs that liquidity dynamics may already be shifting; notably M2 money supply recently hit an all-time high near $22.3 trillion—surpassing peaks seen earlier in 2022 following prolonged contractions earlier last year and beyond.
If confirmed by Fed communications signaling reserve rebuilding efforts underway then Bitcoin’s sensitivity towards such balance sheet maneuvers could rapidly reassert itself among traders’ considerations heading into next year’s macroeconomic landscape changes.
Navigating Labor Market Challenges
The motivation behind this strategic pivot largely stems from recent labor data trends.
Nonfarm payroll figures have fallen during five out of seven recent months alongside slowing job openings,hiring rates,and voluntary resignations.Shifts like these suggest employment strength is waning,moving narratives away from resilience towards fragility.
This evolving backdrop complicates hopes for a “soft landing” economy,the term used when inflation cools without triggering recessionary pressures.Fed policymakers face fewer options amid persistent inflation above target coupled with rising costs associated with maintaining restrictive policies longer-term.
There exists risk labor weakness might deepen before disinflation completes fully.This means upcoming press conferences may carry greater informational weight than mere rate decisions themselves.Market participants will scrutinize Powell’s remarks balancing labor-market stability against preserving credible inflation control paths.His commentary about reserve adequacy,balance sheet management,and timing regarding RMP initiatives will shape expectations well into 2026.
An Uncertain Outlook For Bitcoin
For Bitcoin,this implies outcomes dependent upon nuanced signals rather than clear-cut scenarios.If Powell acknowledges weakening employment conditions while clarifying reserve rebuilding plans,the current narrow price range might be viewed as misaligned relative to underlying policy directions.A decisive move beyond roughly $92K-$93.5K would indicate trader positioning anticipating expanding liquidity environments.
Conversely,a cautious tone or delayed clarity concerning RMP could keep prices confined within lower consolidation zones between approximately $75K-$82K—areas known historically for ETF accumulation bases,strong corporate treasury holdings,and long-standing demand support levels.
Beneath The Surface: Signs Of Capitulation And Accumulation
Internally,BTC markets show ongoing reset dynamics.Short-term holders continue offloading coins amid price weakness,mining profitability deteriorates sharply given production costs nearing ~$74K.Mining difficulty also recorded its steepest drop since July 2025,suggesting marginal miners are scaling back operations or shutting down entirely.Yet simultaneously,we observe early indicators pointing toward supply tightening.BRN Research shared insights indicating large wallets accumulated roughly 45k BTC over last week.Exchange balances continue declining,and inflows via stablecoins hint capital readiness poised for re-entry should conditions improve further.Moreover,supply metrics from Bitwise demonstrate accumulation across wallet segments despite retail sentiment registering extreme fear.Coins migrating away from liquid exchanges towards longer custody reduce available sell-side pressure.This interplay between forced selling,miners exiting selectively,and targeted accumulation typically lays groundwork forming durable bottom structures within markets.
“Capital inflows into Bitcoin continue contracting.Realised capitalization growth slowed significantly,to +0.75% monthly.Profit-taking broadly matches loss-taking,resulting in approximate equilibrium.This state suggests market rest periods where neither buyers nor sellers dominate.”
— Bitwise Analysis
A Technical Perspective On Price Action
From technical analysis standpoint,BTC remains trapped between two crucial thresholds.A convincing break above ~$93,500 would likely trigger momentum-driven rallies targeting psychological milestones such as $100k,$103k short-term holder cost basis levels,and important moving averages.On downside,failure against resistance combined with cautious Fed messaging risks pushing prices back down toward structural demand zones ranging ~$75k-$82k.BRN noted cross-asset behavior supports sensitivity here.Gold versus bitcoin traded inversely ahead of announcements reflecting shifts driven primarily by changing liquidity expectations,rather than pure risk appetite.Should Powell affirm transition toward reserve buildup phase,we can expect rapid capital rotation favoring assets benefiting directly from increased systemic liquidity flows..