The Liquidity Trap Edition

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Hey there Degens!

You might’ve noticed the market’s acting moodier than your ex after a missed text. We’ve got Trump printing pro-crypto executive orders like raffle tickets, but still, 70% of tokens are sitting below their US Election Day prices. Ouch.

Why the slump? Don’t blame that one friend who won’t stop flexing his “100x gem.” Turns out liquidity is the puppet master behind the entire show.

So grab your beverage of choice, settle in, and let’s see what’s really going on under the crypto hood.

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Trump’s “Save Crypto” Narrative—Why It Ran Out of Gas

Remember when everyone got hyped that Trump would single-handedly pump our bags to the moon?

From Nov 4th to mid-Dec, crypto soared 64% and tacked on $1.46 trillion to the total market cap.

But while the hopium was strong, fresh cash entering global markets was actually heading south—not ideal. Once the narrative’s honeymoon ended, we discovered the sobering truth: no new money, no new highs. As a result, a whopping 70% of tokens sank below their November 4th prices. Oof.

TL;DR: Politics can spark a rally, but it won’t keep it going if the liquidity spigot’s turned off.

The Good News: Liquidity Is Coming Back

Don’t toss your seed phrases in the shredder just yet. Global liquidity is set to tick up between now and year’s end—some say it’s already on the rise. Translation: the giant standoff might be easing up.

So if you’re sweating every dip, maybe slip into a yoga pose, or binge-watch some Netflix. Come year’s end, we could have a better environment for that next bull run you’re praying for.

BTC Whale Watch: Key Support at $90K?

Bitcoin’s chilling around $96K, refusing to retest six figures (rude). But on-chain data suggests big whales who recently bought in have a cost basis near $89.2K. They’re unlikely to sell at a loss—meaning we might have a strong floor around $90K if the market tries to panic.

Short-term holders are the ones losing it right now, posting about $834 million in realized losses. Meanwhile, folks who’ve been hodling longer than a month are comparatively zen, basically sipping tea while the noobs run around with their hair on fire.

Bottom line: The whales are calm, and that’s usually a good sign.

The US: Crypto Capital or Crypto Headache?

President Trump wants the US to be the “crypto capital of the world,” but his Jan. 25 executive order also created a working group of a dozen regulators to propose a brand-new framework.

In typical DC fashion, they’re mixing bankers, the SEC, the CFTC, and maybe your neighbor’s cat, trying to figure out if crypto is a commodity, currency, security, or all the above. The fear? We might get stuck with half-baked rules that can’t keep pace with innovation.

Main points from the peanut gallery:

• One: Cryptocurrencies are weird animals—part money, part speculation. We need a new rulebook, not a dusty old one.

• Two: Risk is real. Unregulated derivatives markets are already huge, which is great—right until the meltdown.

• Three: Another agency? Maybe. Because siloed regulators bickering over turf might just strangle the entire industry.

We’ll see if the working group does more than produce a 400-page snooze-fest. For now, color us cautiously optimistic.

So…Are We Doomed or What?

Short answer: Probably not. Yeah, the market’s moody. But liquidity is picking up, whales are holding the line, and even though regulation looms, it might bring mainstream credibility.

Meanwhile, 70% of altcoins are in the doghouse, but that’s what happens when hype fizzles and real money stays on the sidelines. If we do see a year-end liquidity boost, brace yourselves—this rollercoaster may climb again.

Your job: Don’t let the rollercoaster spook you. Fundamentals haven’t imploded, whales are hodling, and a liquidity pump is on the horizon.

So do your research, keep your sense of humor, and remember: the market’s just throwing a tantrum, not a funeral.

Namaste, Degens. See you on the other side of the next price swing.

— The DegenDen Team

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