Late-Cycle Playbook: QCP Sees Bitcoin Bottoming While 2026 Fed Guidance Becomes the Liquidity Anchor

The tape looks like late-cycle, not a recession scare. That’s QCP Capital’s read after a broad correction hit equities, gold, and crypto, with Bitcoin attempting to stabilize around $91,750 following a brief slip below $90,000. The common thread is liquidity—thinner books, persistent spot Bitcoin ETF outflows, and a fast reset in policy expectations.

The policy impulse flipped hard. Odds of a 25 bps cut fell from over 60% a week ago to 32.8% today on CME FedWatch. On prediction market Myriad, users also price a December cut at roughly 32%. That pivot is enough to sting duration assets—Bitcoin included—even as equities hang in on AI-driven capex and resilient household balance sheets.

The late-cycle signature is textbook: tightening liquidity, a reversal in policy assumptions, risk appetite cooling, and valuations re-rating after outsized gains. U.S. credit spreads have only widened modestly and systemic stress looks contained, which argues this is a positioning shakeout rather than a break in market plumbing—consistent with QCP’s stance that we are “firmly past the early-cycle phase,” not flashing imminent recession.

Focus on the liquidity channel, not the label Where crypto lives and dies in late-cycle is the path of liquidity expectation. Two mechanics matter:

- ETF flow reflexivity: Persistent spot ETF outflows reduce passive bid support, raise marginal impact of sellers, and dampen miner and treasury distribution absorption. That elevates price sensitivity to macro headlines and pushes participants toward defensive gamma positioning rather than trend chasing. - Duration repricing: As the market walks back near-term cuts, Bitcoin’s effective duration rises. Long-dated rate guidance—especially for 2026—now drives crypto’s discount rate psychology more than the next meeting’s tweak.

That’s why the December FOMC matters less for the dot it moves in 2025 and more for the narrative it cements about 2026. A clearer, dovish glide path for 2026 would stabilize liquidity expectations, tighten ETF discounts, and improve the odds that weak rebounds evolve into a sturdier base. Without that, price action likely stays choppy and range-bound.

Bottoming is a process, not a print Analysts across desks converge on a similar map: a bottoming process is underway, but a V-shaped recovery looks unlikely. The drivers are liquidity, sentiment, and who holds coins. Exchange balances and other structural metrics still show resilience, yet confidence remains tentative while liquidity is fragile and macro tone is soft. Confirmation of a durable low would look like higher lows, improving ETF and spot inflows, and cleaner policy signals from the Fed.

Positioning and probability skew echo that caution. On Myriad, users assign a 63% chance to Bitcoin tagging $85,000 before $115,000 in the next move—consistent with a late-cycle environment where macro shocks carry outsized impact. Crypto continues to lag as equities benefit from earnings strength, underscoring that this is a rate/liquidity story rather than a growth scare.

How to read the next catalysts - Watch the December FOMC language around the 2026 path and terminal rate distribution. That is the anchor for crypto’s liquidity regime. - Track ETF net flows and discount/premium behavior; flow stabilization tends to precede price stabilization. - Monitor RRP balances, TGA dynamics, and front-end curves (SOFR/EDs) for confirmation that liquidity is loosening, not just sentiment.

Late-cycle does not preclude upside; it raises the bar for sustained upside. If the Fed can credibly signal an easier 2026 path, the market’s duration shock fades, ETF outflows slow, and range-bound repair has room to hold. Until then, expect weak rallies, fast reversals, and a market that rewards patience over heroics.