Forecast of the volatility of the pie under policy games: Favourable Information is limited, suppression still exists.

From a policy perspective, the gradual exit from the quantitative tightening (QT) process on December 1 has injected a dose of "mild Favourable Information" into the risk asset markets—this signal of marginal liquidity easing could have supported asset prices. However, the actual market feedback shows obvious characteristics of a game: the Federal Reserve's hawkish statements on December's monetary policy remain unchanged, and combined with yesterday's rise of 7 basis points (bps) in the 2-year Treasury yield against the trend, it collectively releases a clear signal: the market's expectations for rapid rate cuts in the future have significantly cooled.

This pattern of "limited Favourable Information and ongoing pressure" is exerting a dual constraint on the asset market: on one hand, the liquidity easing is not as strong as expected, directly limiting the upward space of risk assets and making it difficult to form sustained upward momentum; on the other hand, the hawkish policy expectations and rising bond yields are also effectively weakening market participants' risk appetite, leading to a more cautious allocation of funds towards high-volatility assets.

I believe that in this complex policy and market environment, the volatility of Bitcoin is likely to increase. As an asset that is highly sensitive to liquidity and market sentiment, its price movement is difficult to fully benefit from the mild Favourable Information of QT exit, while also being continually suppressed by the hawkish expectations of policies. The tug-of-war between bulls and bears will further amplify the short-term price fluctuations.
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