Bitcoin’s price movements are fluctuating along with the Federal Reserve’s final policy decision of the year. On the surface, the price appears to show little volatility, but the market’s underlying structure is showing a completely different dynamic.

Beneath this seemingly stable price range lies a period of concentrated pressure: on-chain data shows investors are losing close to $500 million per day, leverage in the futures market has dropped sharply, and nearly 6.5 million bitcoins are currently in an unrealized loss state.

This situation resembles the late stage of past market contractions, rather than a healthy consolidation phase.

However, structural adjustments beneath an apparently calm surface are not unusual for Bitcoin, but the timing of this adjustment is noteworthy.

The market’s internal “capitulation-style selling” coincides with a pivotal shift in US monetary policy. The Fed has concluded its most aggressive balance sheet reduction phase in over a decade, and markets expect its December meeting will outline a clearer framework for “reserves rebuilding.”

Against this backdrop, on-chain market pressure and the pending liquidity pivot together set the tone for this week’s major macro events.

Liquidity Pivot

According to the Financial Times, quantitative tightening (QT) officially ended on December 1, during which the Fed reduced the size of its balance sheet by about $2.4 trillion.

This move pushed bank reserve levels into historically tight ranges, and the secured overnight financing rate (SOFR) has repeatedly tested the upper end of the policy rate band.

These changes indicate that the market system is no longer flush with liquidity and is instead gradually entering a “reserve scarcity concern” phase.

In this context, the most important signal from the Federal Open Market Committee (FOMC) is not the widely expected 25 basis point rate cut, but rather the direction of its balance sheet strategy.

Markets expect the Fed to clarify its transition to “Reserve Management Purchases (RMP)” either through explicit statements or policy implementation documents.

According to research firm Evercore ISI, this plan could launch as early as January 2026, with the Fed purchasing about $35 billion in short-term Treasuries monthly—proceeds from maturing mortgage-backed securities would be reallocated into short-term assets.

The details of this mechanism matter: while the Fed is unlikely to label RMP as “stimulus,” ongoing reinvestment into short-term Treasuries will steadily rebuild bank reserves and shorten the maturity structure of the System Open Market Account.

This operation will gradually lift the level of reserves, eventually causing the balance sheet to grow by over $400 billion annually.

Such a pivot would mark the first sustained expansionary policy signal from the Fed since the start of quantitative tightening. Historically, Bitcoin has been far more sensitive to such liquidity cycles than to changes in policy rates.

Meanwhile, broader monetary aggregates suggest the liquidity cycle may already be turning.

Notably, M2 money supply has reached an all-time high of $22.3 trillion, surpassing early 2022’s peak after a prolonged contraction.

(Note: M2 is one of the core metrics for measuring money supply, classified as “broad money.” It covers a wider scope than base money (M0) and narrow money (M1), providing a more comprehensive view of overall liquidity.)

Therefore, if the Fed confirms the start of “reserves rebuilding,” Bitcoin’s sensitivity to balance sheet dynamics could quickly rebound.

Macro Traps

The core rationale for this policy pivot stems from changes in employment data.

In five of the past seven months, non-farm payrolls have declined; job vacancies, hiring rates, and voluntary quits have all slowed, shifting the employment narrative from “resilient” to “under pressure.”

As these indicators cool, the “soft landing” theory becomes increasingly tenuous, and the Fed’s policy options are narrowing.

While inflation has eased somewhat, it remains above policy targets; meanwhile, the cost of “keeping policy tighter for longer” is rising.

The potential risk: if the labor market weakens further before inflation fully returns to target, pressure could intensify. Thus, the information value of this week’s Fed press conference may exceed that of the rate decision itself.

Markets will focus on how Fed Chair Powell balances two goals—maintaining labor market stability and ensuring inflation trajectory credibility. His comments on “reserve adequacy,” “balance sheet strategy,” and the “timing of RMP” will shape market expectations for 2026.

For Bitcoin, this means its price action will not be a simple binary of “up or down,” but will depend on the specific direction of policy signals.

If Powell acknowledges labor market weakness and details a reserves rebuilding plan, the market may judge that current price consolidation is out of sync with policy direction—if Bitcoin breaks above the $92,000–93,500 range, it would signal traders positioning for liquidity expansion.

Conversely, if Powell emphasizes policy caution or delays specifying RMP details, Bitcoin may remain in the lower $82,000–75,000 consolidation range—this area contains ETF holding floors, corporate treasury thresholds, and historical structural demand zones.

Will Bitcoin See “Capitulation Selling”?

Meanwhile, Bitcoin’s internal market dynamics further reinforce the view that “the asset is resetting beneath the surface.”

Short-term holders continue to sell tokens as the market weakens; with mining costs approaching $74,000, mining profitability has deteriorated significantly.

At the same time, Bitcoin mining difficulty just saw its largest single drop since July 2025, indicating marginal miners are cutting capacity or shutting down rigs entirely.

Yet, these signs of stress coexist with early signals of “supply tightening.”

Research firm BRN Research told CryptoSlate that over the past week, large wallets accumulated about 45,000 bitcoins; exchange balances continue to fall; stablecoin inflows indicate funds are poised to re-enter if market conditions improve.

Additionally, asset manager Bitwise’s supply metrics show that even as retail sentiment is at “extreme fear,” various wallets continue accumulating Bitcoin. Tokens are moving from high-liquidity platforms to long-term custody accounts, further reducing the share of supply available to absorb sell pressure.

This combination of “forced selling, miner stress, and selective accumulation” typically forms the basis for long-term market bottoms.

Bitwise further added:

“Bitcoin inflows continue to contract, with the 30-day realized market cap growth now at just 0.75% per month. This suggests current profit-taking and stop-loss selling are roughly balanced, with losses only slightly exceeding gains. This rough equilibrium signals the market has entered a ‘calm phase,’ with neither bulls nor bears in firm control.”

Technical View

Structurally, Bitcoin remains constrained between two key ranges.

If it sustains a break above $93,500, the asset will enter a zone where “momentum models are more easily triggered,” with subsequent targets at $100,000, $103,100 (short-term holder cost basis), and the long-term moving average.

Conversely, if it fails to break resistance in the face of cautious Fed signaling, the market could retreat to the $82,000–75,000 range—a zone that has repeatedly served as a “reservoir” for structural demand.

BRN Research notes that cross-asset performance supports this sensitivity: on the eve of the Fed meeting, gold and Bitcoin have shown inverse trends, reflecting “asset rotation driven by changing liquidity expectations,” not just risk sentiment.

Therefore, if Powell’s comments reinforce the expectation that “reserves rebuilding is the core of the next policy phase,” capital could quickly rotate toward assets that respond positively to “liquidity expansion.”