Bitcoin News Today: Fed's December Thaw Could Melt AI and Crypto Liquidity Freeze

Cathie Wood, founder of ARK Invest, has signaled a potential reversal in the liquidity crunch affecting artificial intelligence and cryptocurrency markets, forecasting improved conditions within weeks. The optimism comes as Ark Invest continues to strategically buy dips in crypto-linked equities, including Block, Coinbase, and Circle, amid broader market volatility. Wood's remarks, echoed across multiple platforms, underscore a belief that macroeconomic factors driving recent liquidity constraints-such as Federal Reserve policies and global trade disruptions-will ease, potentially by early December. This shift, she argues, could reignite risk appetite for tech and digital assets, though she cautions that outcomes remain data-dependent and sensitive to policy changes according to Wood's analysis.

Market participants have begun to factor in these expectations, with trading patterns reflecting cautious optimism. Bitcoin, currently trading at $87,948, has seen a 19.99% decline over 30 days but has stabilized after a 4.62% rebound in the past 24 hours. Ark Invest's $30 million investment in crypto stocks-including $13.5 million in Block, $7.6 million in Circle, and $3.86 million in Coinbase-signals confidence in long-term growth, even as these firms' shares remain under pressure. Coinbase, for instance, has dropped 30% from its peak, while Circle's stock has fallen 51%. Wood's firm has also expanded its exposure to Bitcoin via its spot ETF, adding $2.8 million to its holdings.

The liquidity strain, according to Wood, is not a structural issue but a temporary macro-driven phenomenon. She ties the expected relief to the Federal Reserve's potential policy shift around December 10, when key economic data-such as U.S. employment reports-could confirm a pivot toward easing. "Liquidity dynamics shaped recent price movements, but the broader trend remains intact," she stated during an "In the Know" session. This timeline aligns with broader market expectations, as thin liquidity and high interest rates have pushed investors toward safer assets, exacerbating underperformance in riskier sectors like crypto and AI according to market analysis.

For investors, Wood emphasizes disciplined exposure and robust risk management. Diversified, risk-adjusted strategies are recommended to navigate potential volatility as liquidity normalizes. The firm's approach-buying dips in crypto stocks and maintaining a long-term bullish stance on Bitcoin-reflects this philosophy. Despite trimming her Bitcoin price target from $1.5 million to $1.2 million by 2030 due to stablecoin adoption, Wood remains confident in the asset's resilience during liquidity recoveries.

The broader crypto ecosystem is also witnessing regulatory and infrastructural developments that could support growth. Ripple's RLUSD stablecoin has gained institutional traction in Abu Dhabi, while Tether's investment in Parfin aims to expand USDT's role in Latin American settlements and tokenization. These moves highlight the sector's maturation and institutional adoption, which could further stabilize markets as liquidity improves according to industry reports.