While Bitcoin price trends continue to drift toward the Federal Reserve’s final policy decision this year with little outward volatility, the underlying market structure reflects a very different reality.
What appears to be a stable range hides a period of concentrated stress, with investors realizing nearly $500 million in losses each day and significant deleveraging across futures markets, with nearly 6.5 million BTC currently sitting in unrealized losses, according to on-chain data.
These situations resemble late stages of previous market contractions rather than mild consolidation.
However, while structural resets unfolding beneath a static surface are not unusual for Bitcoin, the timing is notable.
The domestic capitulation coincides with an external inflection point in US monetary policy. The Fed has already completed its most aggressive balance sheet reduction phase in more than a decade, and markets are hoping its December meeting will provide clearer outlines for a transition to reserve rebuilding.
Considering this, the intersection of on-chain stress and pending liquidity transitions forms the backdrop for this week’s macro events.
liquidity pivot
Quantitative tightening officially ended on December 1, according to the Financial Times, ending a period in which the Fed reduced its balance sheet by about $2.4 trillion.
As a result, bank reserves have declined toward levels historically associated with funding strains, and the secured overnight financing rate (SOFR) has periodically tested the upper bounds of the policy corridor.
These developments indicate that the system is no longer illiquid, but is entering an area where foreign exchange reserve shortages are a concern.
Against this backdrop, the most important signal from the FOMC will likely be the direction of its balance sheet strategy, rather than the widely expected 25 basis point rate cut.
The Fed is expected to outline, either explicitly or through an implementation memo, how it intends to transition to reserve-managed purchases (RMPs).
The program could begin as early as January 2026 and include about $35 billion in monthly Treasury securities purchases as outflows from mortgage-backed securities are reinvested in short-term assets, according to Evercore ISI.
Mechanics are important. While the Fed is unlikely to frame the RMP as a stimulus package, reinvestment in notes will steadily rebuild reserves and shorten the maturity profile of system open market accounts.
This maneuver will gradually raise reserves and increase the balance sheet by more than $400 billion annually.
Such a transition would represent the first sustained expansionary impulse since QT began. Historically, Bitcoin has tracked these liquidity cycles more closely than changes in policy interest rates.
Meanwhile, broader financial aggregates suggest the liquidity cycle may already be turning.
In particular, M2 money supply reached a record $22.3 trillion, surpassing its peak in early 2022 after a long period of contraction.
As such, Bitcoin’s sensitivity to balance sheet movements could quickly regain prominence if the Fed confirms that a reserve rebuild is underway.
macro trap
The basis for this change in direction lies in labor data.
Nonfarm payrolls have declined in five of the past seven months, and slowing job openings, hiring rates, and voluntary retirements are shifting the employment narrative from resilience to vulnerability.
As these indicators cool, a “soft landing” framework becomes more difficult to defend, and the Fed faces a narrowing set of policy options.
Inflation is slowing but still above target, but the costs of prolonged tight policy are rising.
The risk is that labor market weakness worsens before disinflation is fully completed. Therefore, this week’s press conference may be more informative than the interest rate decision itself.
Markets will be watching to see how Powell balances the need to maintain labor market stability with the need to protect the credibility of the inflation path. His characterization of reserve adequacy, balance sheet strategy, and RMP timing will guide expectations for 2026.
In the case of Bitcoin, this introduces a conditional outcome rather than a binary one.
If Chairman Powell acknowledges the weakness in the labor market and clarifies his plans to rebuild reserves, the market is likely to interpret the current range as being out of line with policy direction. A move through the $92,000 to $93,500 range would indicate traders are positioning for increased liquidity.
But let’s assume that Chairman Powell emphasizes caution or postpones clarity on the RMP. In that case, Bitcoin could remain within or revisit the downward consolidation band between $82,000 and $75,000, which is populated by historical areas of ETF base, corporate financial benchmarks, and structural demand.
Bitcoin capitulation?
Meanwhile, developments in Bitcoin’s internal market are reinforcing the idea that the flagship digital asset is being reset behind the scenes.
Short-term holders continue to distribute the coin weakly, and mining economics worsen as production costs approach $74,000.
At the same time, mining difficulty recorded its steepest decline since July 2025, indicating that operators who have reached their limits are scaling back or shutting down.
But these signs of stress coexist with early evidence of tight supply.
BRN Research reported crypto slate With around 45,000 BTC accumulated in large wallets over the past week, exchange balances continue to trend downward, and stablecoin inflows indicate capital is preparing to re-engage if the situation improves.
Additionally, Bitwise’s supply metrics show accumulation across wallet cohorts even as retail sentiment shows “extreme fear.” Coins are moving from high-liquidity locations to long-term storage, reducing the portion of supply available to absorb further selling.
This pattern is a combination of forced distribution, minor pressure, and selective accumulation, and typically forms the basis of a durable market floor.
Bit by bit added as follows:
“Capital inflows into Bitcoin continue to contract, with 30-day realized cap growth slowing to just +0.75% per month. This indicates that profit-taking and loss-taking are now roughly balanced, with losses only slightly exceeding gains. This rough equilibrium suggests that the market has entered a state of dormancy, with neither side exerting a meaningful advantage.”
technical judgment
From a market structure perspective, Bitcoin remains surrounded by two important zones.
A sustained break above $93,500 will move the asset into an area where the momentum model is more likely to be triggered, with subsequent levels at $100,000, $103,100 based on short-term holder costs, and the long-term moving average.
Conversely, if resistance fails in the face of the Fed’s cautious message, the market could pull back from $82,000 to $75,000. This range has repeatedly functioned as a reservoir of structural demand.
BRN noted that cross-asset performance supports this sensitivity. Gold and Bitcoin traded inversely ahead of the meeting, reflecting rotations caused by changes in liquidity expectations as well as risk sentiment.
Therefore, if Chairman Powell’s comments reinforce the idea that reserve rebuilding is the next step in the policy cycle, capital flows are likely to quickly redirect toward assets that respond positively to expanding liquidity conditions.
(Tag translation) Bitcoin
