Crypto Market Macro Research Report: Liquidity Repricing Amid Fed Rate Cuts, Bank of Japan Rate Hikes, and the Christmas

I. Federal Reserve Interest Rate Cuts: The Easing Path After Interest Rate Reductions

Therefore, what the market truly expects is not a “one-off rate cut,” but a clear, sustainable, and forward-looking path of easing. The pricing logic of risky assets relies not on the absolute level of current interest rates, but on the discounting of future liquidity conditions. When investors realized that this rate cut did not open up new easing space, but may instead lock in future policy flexibility in advance, their original optimistic expectations were quickly revised. The signals released by the Federal Reserve are akin to a “painkiller,” temporarily relieving tensions but not changing the underlying problem; at the same time, the restrained stance revealed in the policy outlook forced the market to reassess future risk premiums. In this context, the rate cut has become a typical case of “all the good news has been priced in.” Long positions previously built around easing expectations began to loosen, with overvalued assets bearing the brunt. Growth and high-beta sectors in the US stock market were the first to come under pressure, and the تشفير market was not spared either. The pullback in Bitcoin and other mainstream crypto assets is not due to a single negative factor, but a passive reaction to the reality that “liquidity will not return quickly.” When futures basis converges, ETF marginal buying weakens, and overall risk appetite declines, prices naturally tend towards a more conservative equilibrium level. A deeper shift is reflected in the migration of the risk structure in the US economy. A growing body of research indicates that the core risk facing the US economy in 2026 may no longer be a traditional cyclical recession, but rather a demand-side contraction directly triggered by a sharp correction in asset prices. Following the pandemic, the US has seen the emergence of an approximately 2.5 million “excess retirees,” whose wealth is highly dependent on the stock market and risky asset performance, with a strong correlation between their consumption behavior and asset prices. If the stock market or other risky assets experience a sustained decline, this group’s consumption capacity will contract accordingly, creating a negative feedback loop for the overall economy. Under this economic structure, the Federal Reserve’s policy options are further compressed. On the one hand, persistent inflationary pressures remain, and premature or excessive easing could reignite price increases; on the other hand, if financial conditions continue to tighten and asset prices experience a systemic correction, this could rapidly transmit to the real economy through the wealth effect, triggering a decline in demand. The Federal Reserve is thus caught in an extremely complex dilemma: continuing to forcefully suppress inflation could trigger an asset price collapse; while tolerating higher inflation levels would help maintain financial stability and asset prices.

A growing number of market participants are accepting the assessment that in future policy maneuvering, the Federal Reserve is more likely to prioritize “market protection” over “inflation protection” at crucial moments. This means that the long-term inflation center may shift upward, but short-term liquidity injections will be more cautious and intermittent, rather than forming a sustained wave of easing. For risk assets, this is an unfavorable environment—interest rate declines are insufficient to support valuations, while liquidity uncertainty persists. Against this macroeconomic backdrop, the impact of this super central bank week extends far beyond a single 25-basis-point rate cut. It marks a further correction in market expectations for an “era of unlimited liquidity,” and foreshadows the subsequent rate hike by the Bank of Japan and the year-end liquidity tightening. For the crypto market, this is not the end of the trend, but a critical stage requiring a recalibration of risk and a re-understanding of macroeconomic constraints.

II. Bank of Japan’s Interest Rate Hike: The Real “Liquidity Defender”

If the Federal Reserve’s role during this super central bank week was to induce market disappointment and correction regarding “future liquidity,” then the Bank of Japan’s impending action on December 19th is closer to a “bomb defusing operation” directly impacting the foundations of the global financial structure. Currently, the market’s expectation of a 25 basis point rate hike by the Bank of Japan, raising the policy rate from 0.50% to 0.75%, is close to 90%. This seemingly mild rate adjustment means that Japan will push its policy rate to its highest level in thirty years. The key issue is not the absolute value of the interest rate itself, but the chain reaction this change will cause on the global flow of funds. For a long time, Japan has been the most important and stable source of low-cost financing in the global financial system. Once this premise is broken, the impact will far exceed the Japanese domestic market.

Over the past decade, a near-universal structural consensus has gradually formed in global capital markets: the Japanese yen is a “permanent low-cost currency.” Supported by prolonged ultra-loose monetary policies, institutional investors can borrow yen at near-zero or even negative costs, then convert it into US dollars or other high-yield currencies to allocate to US stocks, crypto assets, emerging market bonds, and various risky assets. This model is not short-term arbitrage, but has evolved into a long-term capital structure spanning trillions of dollars, deeply embedded in the global asset pricing system. Because of its excessive duration and high stability, yen carry trades have gradually shifted from a “strategy” to a “background assumption,” rarely priced by the market as a core risk variable. However, once the Bank of Japan clearly enters a rate hike cycle, this assumption will be forced to reassess. The impact of rate hikes goes beyond a marginal increase in financing costs; more importantly, it changes market expectations regarding the long-term direction of the yen exchange rate. When policy rates rise and inflation and wage structures change, the yen is no longer merely a passively depreciating financing currency, but may transform into an asset with appreciation potential. Under this expectation, the logic of carry trades will be fundamentally undermined. Originally, capital flows were centered on “interest rate differentials,” but now “exchange rate risk” considerations have been added, causing the risk-reward ratio of funds to deteriorate rapidly.

In this scenario, arbitrage funds face a choice that is not complex, yet extremely destructive: either close out their positions early to reduce their exposure to the yen, or passively endure the double squeeze from exchange rates and interest rates. For large, highly leveraged funds, the former is often the only viable path. The specific method of closing out positions is also extremely direct—selling the held risky assets to obtain yen to repay financing. This process does not differentiate between asset quality, fundamentals, or long-term prospects; its sole objective is to reduce overall exposure, thus exhibiting a clear characteristic of “indiscriminate selling.” US stocks, crypto assets, and emerging market assets often come under pressure simultaneously, forming a highly correlated decline. History has repeatedly verified the existence of this mechanism. In August 2025, the Bank of Japan unexpectedly raised its policy rate to 0.25%, a move that, while not traditionally considered aggressive, triggered a violent reaction in global markets. Bitcoin fell 18% in a single day, and multiple risky assets came under pressure simultaneously; the market took nearly three weeks to gradually recover. The reason that shock was so severe was precisely because the interest rate hike came suddenly, forcing arbitrage funds to rapidly deleverage without preparation. The upcoming meeting on December 19th, however, is different from the “black swan” event of the past; it’s more like a “gray rhino” that has already shown its tracks. The market has already anticipated the interest rate hike, but the expectation itself does not mean that the risk has been fully digested, especially given the larger rate hike and the superimposed macroeconomic uncertainties.

More noteworthy is the more complex macroeconomic environment surrounding this Bank of Japan interest rate hike compared to the past. Global central bank policies are diverging: the Federal Reserve is nominally cutting rates but tightening future easing in anticipation; the European Central Bank and the Bank of England are relatively cautious; while the Bank of Japan has become one of the few major economies explicitly tightening policy. This policy divergence will exacerbate the volatility of cross-currency capital flows, making the unwinding of arbitrage trades no longer a one-off event but potentially a phased, recurring process. For the crypto market, which is highly dependent on global liquidity, this continued uncertainty means that the central level of price volatility may remain high for some time. Therefore, the Bank of Japan’s rate hike on December 19th is not merely a regional monetary policy adjustment, but a crucial turning point that could trigger a rebalancing of the global financial structure. What it is “dismantling” is not the risk of a single market, but the long-accumulated low-cost leverage assumption in the global financial system. In this process, crypto assets, due to their high liquidity and high beta properties, are often the first to bear the brunt of the impact. This shock does not necessarily mean a reversal of the long-term trend, but it is almost certain to amplify volatility, suppress risk appetite, and force the market to re-examine the funding logic that has been taken for granted for many years.

III. Christmas Holiday سوق Performance: An Undervalued “Liquidity Amplifier”

Starting December 23, major North American institutional investors gradually entered Christmas holiday mode, and global financial markets subsequently entered the most typical and easily underestimated phase of liquidity contraction throughout the year. Unlike macroeconomic data or central bank decisions, holidays do not change any fundamental variables, but they significantly weaken the market’s “absorption capacity” for shocks in the short term. For markets like crypto assets, which heavily rely on continuous trading and market-making depth, this structural decline in liquidity is often more destructive than a single negative event itself. Under normal trading conditions, the market has sufficient counterparties and risk-absorbing capacity. A large number of market makers, arbitrage funds, and institutional investors continuously provide two-way liquidity, allowing selling pressure to be dispersed, delayed, or even hedged.

What’s even more alarming is that the Christmas holiday season didn’t occur in isolation, but rather coincided with a period of concentrated release of macroeconomic uncertainties. The Federal Reserve’s “rate-cutting but hawkish” signal during this super central bank week has significantly tightened market expectations for future liquidity; meanwhile, the Bank of Japan’s upcoming rate hike decision on December 19th is shaking the long-standing funding structure of global yen carry trades. Normally, these two types of macroeconomic shocks can be gradually absorbed by the market over a considerable period, with prices being repriced through repeated market dynamics. However, when they occur precisely during the Christmas holiday period, a window of extremely low liquidity, their impact is no longer linear, but exhibits a significant amplification effect. The essence of this amplification effect is not panic itself, but a change in market mechanisms. Insufficient liquidity means that the price discovery process is compressed; the market cannot gradually absorb information through continuous trading, but is instead forced to adjust through more drastic price jumps. For the crypto market, declines in this environment often don’t require new major negative news; a concentrated release of existing uncertainty is enough to trigger a chain reaction: price drops lead to forced liquidation of leveraged positions, which further increases selling pressure. This selling pressure is rapidly amplified in the shallow order book, ultimately resulting in sharp fluctuations in a short period. Historically, this pattern is not isolated. Whether in the early stages of Bitcoin’s development or in its more recent mature phase, late December to early January has consistently been a period of significantly higher volatility in the crypto market than the annual average. Even in years with relatively stable macroeconomic environments, decreased liquidity during holidays is often accompanied by rapid price surges or drops; and in years with inherently high macroeconomic uncertainty, this window is more likely to act as an “accelerator” for trending market movements. In other words, holidays do not determine the direction, but they greatly amplify price performance once the direction is confirmed.

رابعا: الخاتمة

In summary, the current correction in the crypto market is more akin to a phase of repricing triggered by changes in global liquidity patterns, rather than a simple reversal of a trend. The Federal Reserve’s rate cuts have not provided new valuation support for risk assets; on the contrary, its forward guidance’s limitations on future easing have led the market to gradually accept a new environment of “lower interest rates but insufficient liquidity.” Against this backdrop, highly valued and highly leveraged assets naturally face pressure, and the crypto market’s adjustment has a clear macroeconomic logic.

Meanwhile, the Bank of Japan’s interest rate hike constitutes the most structurally significant variable in this round of adjustments. The yen, long a core funding currency for global carry trades, has seen its low-cost assumptions shattered, triggering not just localized capital flows, but a systemic contraction in global risk asset exposure. Historical experience shows that such adjustments are often phased and recurring; their impact is not fully released within a single trading day, but rather a gradual deleveraging process achieved through sustained volatility. Cryptocurrencies, due to their high liquidity and high beta, often reflect the pressure first in this process, but this does not necessarily mean their long-term logic has been negated.

For investors, the core challenge at this stage is not determining the direction, but rather identifying changes in the environment. When policy uncertainty and liquidity contraction coexist, risk management becomes significantly more important than trend prediction. Truly valuable market signals often emerge after macroeconomic variables have gradually materialized and arbitrage funds have completed their phased adjustments. In the case of the crypto market, the current period is more like a transitional phase of recalibrating risk and rebuilding expectations, rather than the final chapter of the market trend. The medium-term direction of prices will depend on the actual recovery of global liquidity after the holidays and whether the policy divergence among major central banks deepens further.

هذا المقال مصدره من الانترنت: Crypto Market Macro Research Report: Liquidity Repricing Amid Fed Rate Cuts, Bank of Japan Rate Hikes, and the Christmas Holiday Season

Related: Another “wave”? After the hype, can the x402 enter the application stage?

Original article by: 100y.eth, Four Pillars Original translation: Saoirse, Foresight News Key Points In the cryptocurrency industry, most new concepts go through three stages: hype, infrastructure construction, and application popularization. However, most concepts fail to successfully transition from the hype stage to the infrastructure stage and eventually lose market attention. x402 is a payment protocol for artificial intelligence (AI) agents developed by Coinbase that enables AI agents to autonomously complete payments and obtain paid resources through the blockchain without human intervention. Judging from the recent surge in the prices of x402-related tokens, the protocol has entered a hype phase; but unlike other crypto concepts, giants such as Cloudflare, Google Cloud, and Anthropic are actively adopting x402, and its infrastructure construction phase is progressing rapidly. Given the potential of agent-based commerce,…