There are two key interest rate decisions in December, with completely opposite directions, which is quite subtle.

First, the Federal Reserve. At the meeting on December 10, a rate cut is almost a foregone conclusion—the FedWatch tool shows the probability of a cut is stable above 85%. Normally, a rate cut means more liquidity flows into the market, which should be bullish.

But the Bank of Japan is different. On December 19, they are very likely to raise rates, and the governor has already hinted at it. Here’s the problem: if the yen raises rates, what will happen to those carry trades? Funds will withdraw, selling pressure will mount, and the market will be under pressure.

These two forces are pulling against each other. Under normal circumstances, the momentum from a Fed rate cut should outweigh the resistance from a BOJ rate hike. But you know how the current market environment is—good news often doesn’t work, and bad news hits especially hard. So I tend to think that the negative impact from the yen rate hike will be more pronounced. Once things settle after December 19, there’s a good chance the crypto market will continue to pull back.

$BTC