What conditions does Bitcoin need to rise?

Written by: Rhythm Little Worker

Last night, NVIDIA delivered a stunning report card.

In the third quarter, revenue reached $57 billion, a year-on-year surge of 62%, and net profit soared 65% to $31.9 billion. This marks Nvidia's twelfth consecutive exceedance of expectations. After the earnings report was released, the stock price surged 4-6% in after-hours trading, and continued to rise 5.1% in pre-market trading the next day, directly adding about $22 billion to the company's market value, while also propelling Nasdaq futures up by 1.5-2%.

Logically speaking, with such good market sentiment, Bitcoin, the digital gold, should also benefit, right? But reality slapped us in the face — Bitcoin not only didn't rise but actually fell, with the price dropping to $91,363, a decrease of about 3%.

NVIDIA surged, but Bitcoin dropped?

Those investors who once saw Bitcoin as a safe haven are now likely only feeling unease.

Originally packaged as a “tool against inflation” and a “safe haven during economic anxiety,” its current performance resembles that of a high-risk tech stock rather than a safe-haven asset like physical gold.

Data is more straightforward: After a 26% plunge from the historical high at the beginning of October, Bitcoin's current price has basically returned to the level at the beginning of the year. In other words, this entire year has been a waste.

And during the same period, what about real gold? It soared by 55% in 2025. The psychological gap for Bitcoin holders is truly significant.

The factors driving the rise in gold prices are actually quite clear: potential interest rate cuts, a weakening dollar, increased market volatility, and uncertain economic prospects. According to traditional Bitcoin logic, these conditions should also push Bitcoin prices higher. But the reality is quite the opposite.

Mark Shaw, an economist at the Chicago Mercantile Exchange, pointed out in May of this year that since 2020, the correlation between Bitcoin and U.S. stocks has turned positive and has remained so until now. More importantly, the amount of Bitcoin that has flowed into the hands of institutional investors through ETFs and publicly listed cryptocurrency companies over the past year has reached an all-time high.

In other words, Bitcoin is becoming increasingly “mainstream”, but the cost is that it is also becoming more like a traditional risk asset.

Of course, the reason why “Nvidia surged while Bitcoin dropped” lies in the flow of funds.

Nvidia benefits from the kind of certainty in demand that is firmly established in the AI field. CEO Jensen Huang emphasized that “computational demand continues to accelerate,” and the newly launched Blackwell chips are selling “off the charts.” The visibility of $500 billion in orders directly alleviates market concerns about an AI bubble. The major cloud service providers, namely giants like Amazon and Microsoft, have capital expenditures exceeding $380 billion this year, with most of that money flowing to Nvidia.

And what about Bitcoin? It is facing a comprehensive blow from risk aversion sentiment. As a “high Beta risk asset,” it is the first to be hit in an environment of tightening liquidity. In just one week, it has dropped by 12.5%. On November 13, cryptocurrency ETFs saw a net outflow of $867 million in a single day, and long-term holders began to sell off, with the supply of dormant Bitcoin decreasing from 8 million at the beginning of the year to 7.32 million.

What conditions does Bitcoin still need to rise?

Although the current situation is not very optimistic, it is not without hope. For Bitcoin to take off again, several key conditions may need to be met simultaneously.

Liquidity injection after the U.S. government reopens

The government shutdown that lasted for 43 days officially ended on November 18. This shutdown affected 1.25 million federal employees, resulting in approximately $16 billion in lost wages, and also caused the consumer confidence index to drop to a three-year low of 50.4.

Now that the government has reopened, liquidity injection has become crucial.

Here is a concept to popularize - TGA (Treasury General Account), which is the main operating account of the U.S. Treasury at the Federal Reserve. All government revenues and expenditures pass through this account. When the TGA increases, it indicates that funds are flowing from the market to the government, reducing market liquidity; conversely, when the TGA decreases, government spending injects funds into the market, increasing liquidity.

Data shows that during the 43-day period from October 1, 2025, to November 12, the TGA balance continued to accumulate, reaching a peak of $959 billion on November 14. This level is significantly higher than the cash position typically maintained by the Treasury, primarily due to limited spending during the government shutdown, combined with ongoing borrowing, which resulted in a substantial accumulation of cash in the Treasury account.

Currently, the TGA data does not show any significant decline.

Based on the government's reopening date of November 13, 2025, and referencing historical experience, it is expected that in the first week, government employees will be compensated, resulting in approximately $16 billion flowing into the economy, which will have a relatively small impact. In other words, it will be difficult for a large amount of liquidity to enter before November 20.

In 1-2 weeks, around early December, when the TGA operates normally, daily government spending resumes, seasonal tax revenue returns, and the TGA balance begins to fluctuate and release significantly, the market will start to experience noticeable liquidity improvement.

The increase in interbank liquidity and ample institutional funds means that Bitcoin, as a risk asset, will also attract capital inflows and experience a rise.

The experience at the beginning of 2019 provided important reference. At that time, the U.S. government also experienced a long shutdown, lasting from December 22, 2018, to January 25, 2019, for a total of 35 days. During the government shutdown, the TGA balance also accumulated significantly, reaching $413 billion on January 29, 2019. After the government resumed operations, the Treasury quickly increased spending, and within just one month, from January 29 to March 1, the TGA balance decreased by $211 billion, with these funds flowing into the financial system, resulting in significant liquidity improvement. This drove the stock market and Bitcoin to increase by 8.5% and 35%, respectively, within 30 days after reopening.

Compared to the current situation, the Treasury General Account (TGA) balance in November 2025 is expected to reach $959 billion, significantly higher than $413 billion in 2019, indicating a more substantial potential release of liquidity.

Federal Reserve policy shift

Speaking of the Federal Reserve, this is another major boss that influences the direction of Bitcoin.

The latest minutes from the Federal Reserve meeting show that officials have serious disagreements about whether a third consecutive rate cut is necessary. Most officials believe that further rate cuts could exacerbate inflation risks. White House economic advisor Hassett even admitted that “we have lost control of inflation.”

Trump once again showed his “incompetent rage” and directly criticized Federal Reserve Chairman Powell, saying “I really want to fire him, he is extremely incompetent.”

According to CME's “FedWatch”, the probability of a 25 basis point rate cut in December is only 36.2%, while the probability of maintaining the rate is as high as 63.8%.

Worse still, the U.S. Bureau of Labor Statistics has confirmed that the household data for October (used to calculate key statistics such as the unemployment rate) was not collected retrospectively, and therefore, the October employment report will not be released. These non-farm employment data will be included in the November employment report, which will be published on December 16. This means that the Federal Reserve will not have access to key employment data during its final meeting of the year.

Moreover, as U.S. Treasury yields rise, yields across major maturities of U.S. Treasuries have generally increased, with the 10-year yield rising by 2.5 basis points. The market's expectations for a rate cut in December have largely evaporated, with the probability of a rate cut falling to around 31%.

But if we take a longer view, the situation may not be so pessimistic. The delayed November employment data will be released on December 16, and if the data is weak, it may still support the next wave of interest rate cut expectations, which is around January 27 next year. Currently, the probability of a rate cut is 48%, the highest for the 2026 meeting.

Broaden your perspective a little more; although the Federal Reserve's stance is ambiguous, major other central banks around the world that are more dovish have already taken action. This undercurrent may become an important driving force for the rise of Bitcoin.

For example, the European Central Bank currently maintains the deposit facility rate at 2.00%, but there is a high possibility of a 25 basis point rate cut in December, as inflation has already fallen to 2.1%, which is close to the target level. Here's an interesting piece of data: historically, the correlation between ECB rate cuts and Bitcoin price increases is as high as 0.85. Why? Because the liquidity easing in the Eurozone spills over into the global market, enhancing overall risk appetite.

The economy has明显好转.

The current state of the American economy presents a very delicate situation - there are both highlights and hidden concerns.

The trade deficit in August narrowed significantly, falling by 23.8% to 59.6 billion USD, exceeding market expectations of 61 billion USD. This was mainly due to a 6.6% decline in goods imports as a result of tariff effects. This change is expected to contribute 1.5-2.0 percentage points to GDP growth in the third quarter, raising growth forecasts to 3.8%. Sounds good, right? But the problem is that this improvement comes at the expense of imports, which may affect supply chains and consumption in the long run.

Although the 43-day government shutdown has ended, the damage it caused continues. A loss of $16 billion in wages, a consumer confidence index that has fallen to a three-year low of 50.4, and the CBO estimating a GDP loss of 1.5 percentage points in the fourth quarter—these numbers reflect real economic pain.

Food inflation is also key; things that used to cost 100 dollars now cost 250 dollars, and the quality has actually worsened. The surge in egg prices has just calmed down, but America's favorite beef is facing new inflation.

The latest Consumer Price Index (CPI) released on October 24 shows that the prices of roasted beef and steak have increased by 18.4% and 16.6% year-on-year, respectively. Additionally, according to data from the U.S. Department of Agriculture, the retail price of ground beef has soared to $6.1 per pound, setting a record high. Compared to three years ago, beef prices have cumulatively risen by over 50%.

In addition, coffee prices rose by 18.9%, natural gas prices increased by 11.7%, electricity costs went up by 5.1%, and car repair expenses rose by 11.5%. Many young Americans burdened with debt from attending college are feeling even greater pressure due to the rising cost of living.

“Warning Signals of the K-Shaped Economy” This may be the most concerning trend in the current state of the U.S. economy. Nearly 25% of American households are in a “living paycheck to paycheck” situation, wages for low-income groups are stagnating, while the high-income groups (which account for 50% of consumption) continue to benefit from AI-driven investments. The risk of economic divergence is sharply increasing.

In addition, tariff policies continue to weigh on global export economies, with Japan, Switzerland, and Mexico all experiencing contractions in the third quarter. This chain reaction in the global economy will ultimately return to the U.S. market, affecting investors' risk appetite.

But if the U.S. government can improve the U.S. economy afterward, then various assets, including Bitcoin, will have the opportunity to rise.

Institutional capital inflow

If the previous conditions are the “right time,” then institutional funds are the “right people.” This may be the most direct and immediate catalyst.

I have to say that the current data doesn't look good. From November 13 to 19, the ETF had a net outflow of $2 billion (approximately 20,000 bitcoins), the largest weekly outflow since February of this year. The current assets under management (AUM) are $122.3 billion, accounting for 6.6% of the total market value of bitcoin.

What does this mean? Institutional investors are retreating, and they are not doing it slowly.

After all, in the current macro environment, institutional funds are also facing multiple pressures: first, the phenomenon of liquidity stratification is severe. The technology/AI sector is receiving ample funding, traditional safe-haven assets like gold are performing strongly, while the liquidity of purely risk assets like cryptocurrencies is drying up. Money hasn't disappeared; it's just gone elsewhere.

Moreover, the typical behavior patterns of institutional investors and fund managers are often shaped by an incentive structure of “avoiding mistakes.” The internal evaluation system within the industry places more emphasis on “not falling behind peers” rather than “whether excess returns have been achieved.” Within this framework, taking on risks that contradict mainstream views often comes at a cost that far exceeds potential gains.

As a result, most managers tend to maintain a position structure consistent with the mainstream market allocation. For example, if Bitcoin is experiencing an overall pullback and a particular fund manager still maintains a significant long exposure, then their drawdown will be interpreted as a “judgment error,” and the criticism that arises from this is far greater than the recognition that comes from an equivalent level of profit. Ultimately, under such institutional constraints, “conservatism” becomes a rational choice.

But history tells us that the flow of institutional funds often reverses suddenly at a certain critical point. So where is this critical point? There are three clear signals:

Signal 1: Continuous net inflow for 3 days

This is the most important signal. Historical data shows that when ETF fund flows turn positive and maintain a net inflow for 3 consecutive days, Bitcoin tends to rise by 60-70% on average within 60-100 days.

Why is it so magical? Because institutional investment is the area where the “herd effect” is most evident. Once the trend reverses, subsequent funds will follow like a domino effect. The market surge at the beginning of 2024 was initiated this way.

Signal 2: Single-day inflow exceeds 500 million dollars

This represents the entry signal for large institutions. In October 2024, a weekly inflow of 3.24 billion dollars directly drove Bitcoin to break its historical high. Such momentum is something retail investors simply cannot achieve.

What does 500 million dollars in a single day mean? It is equivalent to giants like BlackRock and Fidelity deciding to increase their positions at the same time. The entry of funds at this level is often accompanied by clear macro judgments—they see signals that ordinary investors cannot.

Signal Three: AUM ratio rises to above 8%

Currently, the $122.3 billion AUM accounts for 6.6% of the market value of Bitcoin, a historically low level. During the peak period in 2024, this ratio reached 8-9%. When this proportion begins to rise, it indicates that institutions are not only buying Bitcoin but are doing so at a pace that exceeds the rate of increase in Bitcoin prices.

So, under what circumstances will institutional funds flow back?

Basically, it is as mentioned earlier: the Federal Reserve has clearly signaled interest rate cuts; U.S. economic data has become clearer; global central banks are coordinating easing to create resonance; and there has been a technical breakthrough of key resistance levels, etc.

Possible time points for price increase

After mentioning so many conditions, what everyone might be most concerned about is: when will it rise?

Although no one can accurately predict the market, we can identify several key points based on the timeline of macro events.

December 10: FOMC Meeting

This is the last Federal Reserve meeting of the year and also the event that the market is most focused on.

If interest rates are really cut, Bitcoin may see a surge; if not, it may drop again.

Here is a key point: even if there is no interest rate cut, if the Federal Reserve signals a dovish stance (for example, emphasizing “maintaining flexibility” and “closely monitoring employment data”), it will support market sentiment. Conversely, if there is no interest rate cut and the stance is hawkish, then be prepared for short-term pressure.

December 16: Delayed November employment data

This data will include the complete situation for October and November, confirming the true trends of the labor market.

If the data remains weak for two consecutive months, the probability of an interest rate cut at the beginning of 2026 will increase significantly. This will provide mid-term support for Bitcoin. If the data is chaotic or contradictory, the market may continue to be entangled, and the range-bound pattern will persist.

The certainty of data release is high, but the quality of the data itself may be unreliable (government shutdowns lead to statistical confusion), so market reactions may be more based on interpretation rather than the data itself.

Late December to the end of the year: the “traditional peak season” for liquidity.

This is an interesting seasonal pattern. Historically, from late December to the New Year, institutional investors engage in year-end rebalancing, and the reduced trading volume during the holidays amplifies price volatility.

If the previous events create a positive synergy, there may be a “Christmas rally” at the end of the year. However, we must also be alert to the “sell the news” effect—profit-taking after the good news is realized.

Q1 2026: The “Great Game” of Global Liquidity Synchronization and Easing

This is the most imaginative time window.

If the Federal Reserve cuts interest rates in December or January next year, and the European Central Bank and the People's Bank of China continue to maintain an accommodative policy, a situation of synchronized global liquidity improvement may emerge. In this case, Bitcoin could experience a surge similar to that of 2020—when it rose from a low of $3,800 in March to $28,000 by the end of the year, an increase of over 600%.

Of course, it is unlikely that 2026 will completely replicate 2020 (when the pandemic stimulus was unprecedented), but the combination of global central bank coordinated easing + TGA fund release + institutional fund inflow is enough to drive a decent market rally.

The possibility of global liquidity easing is moderately high (60-65%). Central banks around the world are facing pressure from economic slowdown, and easing is a high-probability event.