Can Bitcoin start a Christmas rally after returning to $90,000?

Author: Rhythm Little Worker

Original Title: After Bitcoin returns to $90,000, is the next thing Christmas or a Christmas disaster?

Whether it’s locals or foreigners, they all cannot escape the traditional mindset of “having a good reunion during the festival.” The fourth Thursday of November each year is the traditional major holiday of Thanksgiving in the United States.

This year's Thanksgiving, what people in the crypto community are most grateful for may be that Bitcoin has returned to 90,000 USD.

In addition to the influence of factors like “holiday market trends,” a “Beige Book” that unexpectedly became a key decision-making reference due to the government shutdown also helped reshape the course of this year's final monetary policy. The probability of the Federal Reserve cutting interest rates in December soared from 20% a week ago to 86%.

When the Federal Reserve's attitude reverses, when major global economies simultaneously enter “money-printing mode,” and when the cracks in the traditional financial system grow wider, crypto assets are standing at their most critical seasonal window. Once the floodgates of global liquidity open, how will it affect the direction of the crypto industry? More importantly, will the upcoming holiday be Christmas or a Christmas crisis?

Probability of interest rate cut in December soars to 86%

According to data from Polymarket, the probability of the Federal Reserve lowering interest rates by 25 basis points at the December meeting has skyrocketed from about 20% a week ago to 86%. This should be one of the main reasons for the recent surge in Bitcoin, as the reversal in probability is due to an economic report known as the “Beige Book.”

Important Report on Interest Rate Cuts

On Wednesday, the “Beige Book,” compiled by the Dallas Fed and gathering the latest information from 12 districts across the U.S., was officially released. As usual, it is just a routine document, but due to the government shutdown causing a significant delay in the release of key economic data, this report has instead become a rare and comprehensive source of information that the FOMC can rely on before making its decisions.

In other words, this is one of the few windows that can truly reflect the operating conditions of the grassroots economy in the context of data absence from the Federal Reserve.

The overall judgment given in the report is very straightforward: economic activity has hardly changed, labor demand is continuing to weaken, cost pressures on businesses have increased, and consumer spending willingness is becoming cautious. Beneath the surface stability of the US economy, some structural looseness is beginning to emerge.

The most关注部分 of the entire report is the description of the changes in the labor market. Over the past six weeks, there have not been many positive signs in the US labor market. About half of the regional Federal Reserves indicated that local businesses’ willingness to hire is declining, with some even showing a trend of “if we can avoid hiring, we will.” The difficulty of recruitment has significantly decreased in multiple industries, contrasting sharply with the severe labor shortages of the past two years. For example, in the Atlanta district of several southeastern states in the US, many businesses are either laying off employees or only replacing departing staff minimally; while in the Cleveland district in places like Ohio and Pennsylvania, some retailers are actively reducing their workforce due to declining sales. These changes indicate that the loosening of the labor market is no longer an isolated phenomenon, but is gradually spreading to broader industries and regions.

At the same time, although inflationary pressures have been described as “moderate,” the reality faced by businesses is more complex than the numbers suggest. Some manufacturing and retail companies are still bearing the pressure of rising input costs, with tariffs being one of the reasons— for example, a brewery in the Minneapolis area reported that the significant rise in aluminum can prices has raised production costs. But more challenging are healthcare costs, which have been mentioned by nearly all jurisdictions. Providing healthcare coverage for employees is becoming increasingly expensive, and this cost does not have the cyclical nature of tariffs; rather, it represents a more difficult-to-reverse long-term trend. As a result, businesses are forced to make tough choices between “raising prices” and “shrinking profits.” Some companies pass the costs onto consumers, further driving up prices; while others choose to absorb the costs themselves, further compressing profit margins. Whichever way, this will ultimately be reflected in the CPI and corporate earnings performance in the coming months.

Compared to the pressures on the enterprise side, changes on the consumer side cannot be ignored either. High-income groups continue to support impressive results in high-end retail, but a broader range of American households are tightening their spending. Many regions have reported that consumers are increasingly struggling to accept price hikes, especially middle- and low-income families, who are more inclined to delay or forgo non-essential spending when budgets are tight. Feedback from car dealers is particularly telling: as federal tax subsidies expire, electric vehicle sales have rapidly slowed, indicating that consumers are becoming more cautious when facing large expenditures, even in sectors that previously experienced strong growth.

In various economic disturbances, the impact of the government shutdown is clearly magnified in this report. The duration of the shutdown has set a historical record, which not only directly affected the income of federal employees but also dragged down local consumption due to their reduced spending—car sales in the Philadelphia area, for instance, have significantly declined as a result. However, what is truly surprising is that the shutdown has also affected a wider range of economic activities through other channels. Airports in some Midwest regions have fallen into chaos due to a decrease in passengers, which has led to a slowdown in commercial activities as well. Some businesses have also experienced delays in orders. This chain reaction indicates that the impact of the government shutdown on the economy is far more profound than the mere “suspension of government functions.”

On a more macro technological level, artificial intelligence is quietly changing the economic structure. Respondents in the “Brown Book” exhibit a subtle “dual-track phenomenon”: AI is driving investment growth on one hand, as a manufacturer in the Boston area receives more orders due to strong demand for AI infrastructure; but on the other hand, it is causing some companies to reduce entry-level positions, as basic tasks are partially being replaced by AI tools. Similar concerns have also emerged in the education sector—colleges in the Boston area report that many students are worried that traditional jobs will be affected by AI in the future, leading them to prefer fields like data science that are more “risk-resistant.” This indicates that AI's rewriting of the economic structure has already permeated from the industrial level to the talent supply side.

It is worth noting that the changes presented in the “Beige Book” are also corroborated by the latest data. Signs of employment weakness have appeared synchronously across multiple jurisdictions, while on the price front, the Producer Price Index (PPI) year-on-year is only 2.7%, having fallen to its lowest level since July. Core prices also show a continuous trend of softening, with no signs of any rekindled acceleration. Both employment and inflation, which are directly related to monetary policy, have led the market to begin reassessing the next moves of the Federal Reserve.

Economic “fatigue” has spread to regional Federal Reserves

National trends can be seen in macro data, but the local Federal Reserve reports are more like bringing the lens closer to businesses and households, clearly showing that the cooling of the U.S. economy is not uniform, but presents a kind of 'distributed fatigue'.

In the northeastern region, businesses in the Boston area generally report a slight expansion in economic activity, with home sales regaining some momentum after a prolonged stagnation. However, consumer spending remains flat, employment has declined slightly, and wage growth has also moderated. Rising food costs have pushed grocery prices up, but overall price pressures remain manageable, and the overall outlook remains cautiously optimistic.

The situation in the New York area is noticeably colder. Economic activity is declining moderately, and many large employers have begun layoffs, resulting in a slight contraction in employment. Although the rate of price increases has slowed, it remains high; the manufacturing sector has seen a slight recovery, but consumer spending continues to be weak, with only high-end retail remaining resilient. Businesses generally have low expectations for the future, and many believe that there will be no significant improvement in the economy in the short term.

A little further south, the Philadelphia Fed describes a reality where “weakness had already appeared before the standstill.” Most industries are experiencing a mild decline, employment is decreasing in sync, and price pressure is squeezing the living space of middle- and low-income families, while recent changes in government policy have left many small and medium-sized enterprises feeling cornered.

The Richmond district further down appears to be somewhat more resilient. The overall economy maintains moderate growth, consumers are still hesitant about large purchases, but daily consumption continues to show slow growth. Manufacturing activity has slightly contracted, while other sectors remain roughly stable. Employment has not shown significant changes; employers are more inclined to maintain their current team size, and both wages and prices are in a moderate upward range.

The southern region covered by the Atlanta Fed is more like a “stagnant” state: economic activity remains largely stable, employment is steady, and prices and wages are rising moderately. Retail growth has slowed, tourism activity has slightly declined, and the real estate sector remains under pressure, although there are some signs of stabilization in the commercial real estate market. Energy demand has increased slightly, while manufacturing and transportation sectors continue to operate at a low speed.

In the central St. Louis area, overall economic activity and employment have “not changed significantly,” but demand is further slowing due to the government shutdown. Prices are rising moderately, but businesses are generally concerned that the increase will widen in the next six months. Under the dual pressure of economic slowdown and rising costs, local business confidence has become somewhat pessimistic.

These local reports, when pieced together, reveal an outline of the U.S. economy: there is no broad recession, nor a clear recovery, but rather a scattered display of varying degrees of weakness. It is this set of “differing temperatures” among local samples that forces the Federal Reserve to confront a more realistic question before its next meeting— the cost of high interest rates is fermenting in every corner.

Federal Reserve Officials Shift Stance

If the “Brown Book” presents the “expression” of the real economy clearly enough, then the statements from Federal Reserve officials over the past two weeks have further revealed that the policy level is quietly shifting. The subtle changes in tone may seem like mere wording adjustments to the outside world, but at this stage, any change in the temperature of the tone often indicates a shift in internal risk assessments.

Several heavyweight officials have coincidentally begun to emphasize the same fact: the U.S. economy is cooling, the pace of price declines is faster than expected, and the slowdown in the labor market “deserves attention.” This is a noticeable softening in tone compared to their nearly unified stance over the past year of “maintaining a sufficiently tight policy environment.” Particularly, the expressions regarding employment have become especially cautious, with some officials frequently using terms such as “stabilizing,” “slowing down,” and “moving toward a more balanced direction,” instead of emphasizing that it “remains overheated.”

This way of describing is rarely seen in the later stages of a hawkish cycle; it is more like a euphemistic expression of “We are seeing some preliminary signs that current policies may be tight enough.”

Some officials have even begun to explicitly mention that overly tightening policies could bring unnecessary economic risks. The emergence of this statement itself is a signal: when they start to guard against the side effects of “excessive tightening,” it means that the policy direction is no longer one-sided but has entered a stage that requires fine-tuning and balancing.

These changes have not escaped the market's attention. Interest rate traders were the first to react, and the pricing in the futures market showed significant fluctuations within a few days. The expectation of an interest rate cut, which was originally thought to be “at the earliest until mid-next year,” has been gradually brought forward to spring. The “interest rate cut before mid-year” that no one dared to publicly discuss in the past few weeks has now appeared in the benchmark forecasts of several investment banks. The logic of the market is not complicated:

If employment continues to be weak, inflation continues to decline, and economic growth lingers around zero for an extended period, then maintaining excessively high interest rates will only exacerbate the problem. The Federal Reserve will ultimately need to choose between “sticking to tight policy” and “preventing an economic hard landing,” and current signs suggest that this balance is beginning to tip slightly.

Therefore, when the “Brown Book” depicts that the temperature of the economy is dropping to “mildly cool”, the change in the Federal Reserve's attitude and the market's repricing behavior also begin to corroborate each other. A consistent narrative logic is taking shape: the U.S. economy is not experiencing a rapid decline, but its momentum is gradually exhausting; inflation has not completely disappeared, but it is moving towards a “controllable” direction; policy has not clearly shifted, but it is no longer in the unreserved tightening posture it was in last year.

New Cycle of Global Liquidity

Anxiety Behind Japan's 115 Trillion New Debt

While expectations are loosening domestically in the United States, major economies overseas are quietly pushing the curtain of “global re-inflation,” such as Japan.

The scale of Japan's latest stimulus plan is much larger than the outside world imagined. On November 26, multiple media outlets cited sources familiar with the matter, stating that Prime Minister Sanae Takaichi's government will issue at least 11.5 trillion yen (about 73.5 billion USD) in new bonds for the latest economic stimulus program. This scale is almost double that of the stimulus budget during Shigeru Ishiba's time last year. In other words, Japan's fiscal direction has shifted from “caution” to “must support the economy.”

Despite the authorities expecting tax revenue to reach a record 807 trillion yen this fiscal year, the market has not found solace in this. Investors are more concerned about Japan's long-term fiscal sustainability. This also explains why the yen has been continuously sold off recently, Japanese government bond yields have soared to a twenty-year high, and the dollar-yen exchange rate has been hovering at high levels.

At the same time, this stimulus plan is expected to bring a boost of 240 trillion yen to the actual GDP, with an overall economic impact close to 265 billion dollars.

In Japan, there are also attempts to suppress short-term inflation through subsidies, such as a utility subsidy of 7,000 yen per household, which will be issued for three consecutive months to stabilize consumer confidence. However, the deeper impact is on capital flows — the continued weakening of the yen has led more and more Asian funds to start considering new allocation directions, with crypto assets being right at the forefront of the risk curve they are willing to explore.

Crypto analyst Ash Crypto has discussed Japan's recent “money printing” actions in conjunction with the Federal Reserve's policy shift, believing it will push the risk appetite cycle all the way to 2026. Meanwhile, Dr. Jack Kruse, who has long been a steadfast supporter of Bitcoin, interprets it more directly: the high yields on Japanese bonds are a signal of pressure on the fiat currency system, and Bitcoin is one of the few assets that continues to prove itself during such cycles.

The UK's debt crisis seems to be returning to 2008

Let's take a look at the recent turmoil in the UK.

If Japan is easing monetary policy and China is stabilizing it, then the UK's current fiscal actions seem more like adding more weight to a cabin of a ship that is already leaking. The latest budget proposal has almost caused a collective frown in London's financial circle.

The evaluation given by the Institute for Fiscal Studies, which is regarded as one of the most authoritative analytical institutions, is unequivocal: “Spend first, pay later.” In other words, expenditures are immediately expanded, while tax increases are postponed to take effect several years later. This is a standard fiscal structure of “leaving problems for future governments.”

The most striking aspect of the budget is the extension of the freeze on the personal income tax threshold. This seemingly insignificant technical operation will contribute £12.7 billion to the Treasury in the 2030-31 fiscal year. According to the Office for Budget Responsibility's forecasts, by the end of the budget cycle, a quarter of workers in the UK will be pushed into the 40% higher tax bracket. This means that even if Labour MPs applaud the increase in landlord tax and dividend tax, it is still the ordinary working class that continues to bear the real pressure.

In addition, tax increase items are being implemented one after another: the tax benefits of the pension salary sacrifice scheme are being restricted, which is expected to contribute nearly £5 billion by 2029-30; properties valued over £2 million will be subject to an annual “mansion tax” starting from 2028; the dividend tax will increase by two percentage points starting in 2026, with the basic and higher rates rising to 10.75% and 35.75%, respectively. All these policies, which seem to be “taxing the rich,” will ultimately be transmitted to the entire society in a more covert manner.

The increase in taxes brings an immediate expansion of welfare spending. According to OBR's estimates, by the year 2029-30, annual welfare spending will be £16 billion higher than previously predicted, which includes the additional costs from overturning the “two-child welfare cap.” The outline of fiscal pressure is becoming clearer: short-term political dividends, long-term fiscal black hole.

The backlash triggered by this budget has been more intense than in previous years, partly because the UK's fiscal deficit is no longer just “a bit wider,” but is approaching crisis levels. Over the past seven months, the UK government has borrowed £117 billion, nearly equivalent to the scale of the bailout of the entire banking system during the 2008 financial crisis. In other words, the debt black hole created by the UK now has reached crisis levels without an actual crisis.

Even the usually mild Financial Times has rarely used the word “brutal” to point out that the government still does not understand a fundamental issue: relying on repeated tax rate increases to fill the gap in the case of long-term economic stagnation is doomed to fail.

The market's judgment on the UK has become extremely pessimistic: the UK is “out of money,” and the ruling party seems to have no viable growth path, only pointing to higher taxes, weaker productivity, and higher unemployment rates. As the fiscal gap continues to widen, it is highly likely that the debt will be “de facto monetized”—the ultimate pressure will fall on the pound, becoming the market's “safety valve.”

This is also why more and more analyses are spreading from traditional finance to the crypto space recently. Some have directly given a summary conclusion: when currency begins to be passively devalued, and the wage-earning class and asset-less groups are slowly pushed towards the cliff, the only thing that will not be arbitrarily diluted is hard assets. This also includes Bitcoin.

Christmas or Christmas Robbery?

At the end of each year, the market habitually asks: is this year a “Christmas” or a “Christmas crisis”?

Thanksgiving is about to pass, and its “seasonal benefits” for the U.S. stock market have been discussed by the market for decades.

The difference this year is that the correlation between the crypto market and the US stock market has approached 0.8, with the ups and downs on both sides almost synchronized. The accumulation signals on-chain are strengthening, and the low liquidity during the holidays often magnifies any rise into a “vacuum rebound.”

The crypto community repeatedly emphasizes the same thing: holidays are the easiest window for short-term trend markets to emerge. Low trading volume means that lighter buying pressure can push prices out of dense trading areas, especially in recent situations where sentiment is cooler and positions are more stable.

It can be felt that the market consensus is quietly forming. If the US stock market starts a small-level rebound after Black Friday, cryptocurrencies will be the class of assets that reacts the most violently; while Ethereum is viewed by many institutions as “equivalent to small-cap stocks with high beta.”

Furthermore, shifting the focus from Thanksgiving to Christmas, the core discussion has changed from “Will the market rise?” to “Will this seasonal rebound continue into next year?”

The so-called “Christmas Rally” was first proposed in 1972 by Yale Hirsch, the founder of Stock Trader's Almanac, and has gradually become one of the many seasonal effects in the U.S. stock market. It refers to the phenomenon where the U.S. stock market usually experiences a surge during the last 5 trading days of December and the first 2 trading days of the following year.

The S&P index has risen in 58 out of the last 73 years around Christmas, with a win rate of nearly 80%.

More importantly, if the Christmas rally occurs, it may be a harbinger of good performance in the stock market for the following year. According to Yale Hirsch's analysis, if the Christmas rally, the first five trading days of the new year, and the January barometer are all positive, then the U.S. stock market for the new year is likely to be quite good as well.

In other words, the last few days of the year are the most indicative micro window of the entire year.

The fourth quarter is historically the easiest period for Bitcoin to initiate trends. Whether it's the early miner cycles or the later institutional allocation rhythms, Q4 has naturally become a “right-side market season.” This year, it is compounded by new variables: expectations of interest rate cuts in the U.S., improved liquidity in Asia, increased regulatory clarity, and a return of institutional holdings.

So the question becomes a more realistic judgment: If the US stock market enters a Christmas rally, will Bitcoin move more aggressively? If the US stock market doesn't rally, will Bitcoin move on its own?

This has determined whether practitioners in the crypto industry will face a Christmas celebration or a Christmas disaster.