QCP: Market Focused on This Week's Fed Meeting, Bitcoin Experiences Year-End Liquidity Crunch and Severe Volatility

December 8: QCP’s daily market note noted that Bitcoin (BTC) saw sharp volatility in the $88k-$92k range on Sunday, while Ethereum (ETH) surged quickly from $2,910 to $3,150. Year-end liquidity is thinning, making markets particularly sensitive to small capital flows. Despite the strong swings, liquidations have been minimal—signaling shrinking market participation and open positions this quarter. Open interest for BTC and ETH perpetual contracts has fallen 40-50% from October’s peak, and retail sentiment is back to bear-market territory. Supply conditions are tightening sharply: ~25,000 BTC left exchanges in the past two weeks, ETF and corporate holdings have surpassed exchange balances for the first time ever, and ETH exchange reserves are near a decade-low. This points to institutions quietly accumulating as retail investors exit. All eyes are on Wednesday’s FOMC meeting. While the market widely expects a 25bp rate cut, balance sheet guidance will set the year-end direction for risk assets. BTC remains range-bound between $84k and $100k, with market depth worsening. With year-end holidays looming, a breakout in either direction could spark the next major trend.