Bitcoin (BTC) and Ether (ETH) posted a strong recovery on Wednesday, climbing to their highest levels in over two weeks, as investors increased their expectations that the U.S. Federal Reserve (Fed) will move toward a more accommodative monetary policy in the coming months.

Recent signs of economic weakness in the U.S. have strengthened speculation that liquidity stimulus could return, reigniting demand for scarce and inflation-resistant assets, including cryptocurrencies, gold, and long-term government bonds.

Notably, this bullish momentum was not limited to crypto. The S&P 500 index and gold prices also rallied, reflecting expectations of fresh capital inflows into financial markets.

However, despite the rebound, the total crypto market capitalization remains 29% below its all-time high of $4 trillion, keeping BTC and ETH traders cautious about a potential macro-driven correction.

🪙 Scarce Asset Demand Rises as Liquidity Expectations Grow

Demand for scarce assets continues to strengthen:

U.S. 5-year Treasury bonds rallied

Gold surged toward $4,240, up over 3% in the past two weeks

Bitcoin remains stable near $93,000

Ether is still down 37% from its all-time high of $4,956

This divergence forces investors to re-evaluate the outlook for altcoins, as many remain deeply underwater despite Bitcoin’s relative resilience.

🧑‍🏭 U.S. Labor Market Weakens, Fueling Fed Rate Cut Expectations

The U.S. labor market showed clear signs of cooling in November:

Private companies cut 32,000 jobs, with small businesses hit the hardest

The ADP payroll report showed average wages fell 0.1% month-over-month

This wage decline helped ease inflation concerns

Markets are now fully focused on the Fed’s interest rate decision scheduled for December 10, which is expected to provide clearer policy guidance heading into 2026.

💵 Crypto Benefits From Liquidity — But Confidence Remains Fragile

Fed policymakers remain deeply divided, partly due to the lack of complete economic data during the extended U.S. government budget shutdown through November 12.

Two competing narratives dominate:

🟢 One camp supports rate cuts to protect the labor market

🔴 Another warns that premature easing could reignite inflation, which remains well above the Fed’s 2% target

🤖 AI Investment Boom Adds New Market Risks

Another growing source of uncertainty is the massive capital rotation into artificial intelligence infrastructure.

Jean Boivin, Head of the BlackRock Investment Institute, warned:

> “There is a lot of debate about bubble risks… and people are very aware of these dangers.”

According to Yahoo Finance, BlackRock also highlighted real-world limitations in scaling massive AI data centers, adding new structural risks to global markets.

🏬 Consumer Spending Weakens as Corporate Margins Shrink

On the same day, Macy’s, one of the largest U.S. department store chains, warned that:

Consumer spending remains muted and cautious

High tariffs continue to pressure margins into late 2025

Prices will be raised selectively across most product categories

CEO Tony Spring confirmed in an interview with CNBC that the company is being forced to adjust pricing defensively, reflecting fragile consumer confidence.

📉 Leverage Demand in Crypto Remains Abnormally Low

One of the most striking signals of market hesitation comes from the derivatives market:

Under neutral conditions, annualized funding rates typically range between 6% and 12%

Currently, funding demand for leveraged long positions on BTC and ETH remains unusually weak

This lack of speculative conviction stands in sharp contrast to traditional equities, where the Russell 2000 Small Cap Index is just 2.3% below its all-time high.

🏦 Stocks May Outperform While Crypto Lags — For Now

Stock markets are expected to benefit directly from monetary easing, driven by:

Lower capital costs

Government incentives for AI infrastructure

Investments in nuclear energy development

If overall risk sentiment fails to improve meaningfully, cryptocurrencies may continue to lag behind equities, especially under conditions of labor market weakness and rising structural uncertainty.

✅ Final Outlook: Crypto Not Facing Collapse — Liquidity Still Provides Support

Despite weak labor and consumption data, the crypto market is not facing an immediate collapse.

Expected liquidity injections should:

✅ Reduce systemic economic pressure

✅ Sustain interest in scarce assets

✅ Support a gradual recovery rather than a sharp reversal

If monetary policy continues to ease, Bitcoin and Ether are more likely to stabilize and build higher bases, instead of entering another deep correction cycle.

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