Chapter 1 Introduction: The darkest moment of the global capital market and the dialectics of 'exhausted bad news'
1.1 Overview of the current market ecology: Panic and opportunity coexist
In mid-December 2025, the global financial markets seem to have entered a winter of liquidity exhaustion. From the sell-off of tech stocks on Wall Street to the continued decline in the cryptocurrency market, the widespread pullback in asset prices is validating a core logic: global liquidity is undergoing a structural tightening. As traders, our core strategy at this stage is very clear - 'maintain a focus on high shorts, with low longs as a supplement.' This is not only the survival rule in a bear market but also the cornerstone for achieving excess returns.
However, the market is always a multidimensional battleground. When the vast majority of investors exit the market due to fear, real opportunities often hide within extremely pessimistic sentiments. As this report aims to explore: In light of the overwhelming anticipation of the Bank of Japan's (BOJ) interest rate hike, has the so-called 'bad news' already been priced in by the market? When the shoe finally drops, will we see a wave of highly actionable 'B wave rebound'?
1.2 Overview of Core Views.
This report will rely on detailed data analysis and technical deduction to argue the following core viewpoints:
Macroeconomic aspect: The Bank of Japan's interest rate hike on December 19 is almost a done deal (from 0.5% to 0.75%), but this has already been made clear. The market's panic pricing of this event is nearing its end, and the probability of 'bad news landing as good news' is very high.
Technical perspective: Bitcoin (BTC) maintains a bearish outlook targeting 70,000-80,000, but in the short term, within the 4-hour Schiff Pitchfork channel, the 82,000-83,000 range has formed a strong support structure, providing an excellent risk-reward ratio for capturing the B wave rebound.
On the strategy level: We will strictly implement the tactic of 'lightly going long on the left side for a rebound, heavily shorting at the B wave high on the right side.' Meanwhile, we will utilize the supercycle of silver in industrial demand to construct a cross-market hedge portfolio.
Chapter 2 Macroeconomic Liquidity Deconstruction: The Bank of Japan's interest rate hike and global asset pricing reassessment.
2.1 Bank of Japan Interest Rate Hike: The 'Blood-Drawing Machine' of Global Liquidity.
One of the roots of liquidity tightness lies in the expectation of the normalization of the Bank of Japan's monetary policy. For a long time, Japan, as the world's largest creditor nation, has maintained ultra-low interest rates, making it a 'liquidity reservoir' of the global capital market. Investors borrow cheap yen, exchange it for USD, and invest in US stocks (especially tech stocks) and crypto assets, which is the famous 'Yen Carry Trade.'
However, this logic is reversing.
Interest rate hike expectations: The market generally anticipates that the Bank of Japan will announce raising the short-term interest rate from 0.5% to 0.75% at the meeting on December 18-19.
Transmission mechanism: Interest rate hikes will push up Japanese government bond yields, attracting overseas funds back to Japan. This means that the US stock and crypto markets will face a 'blood-drawing' effect. The recent decline in US stocks, especially the correction of the Nasdaq index regarding the AI bubble, is a direct confirmation of this logic.
Table 2.1: Review of the Bank of Japan's interest rate hike history and asset price reactions.
Time node policy changes Bitcoin (BTC) response market background and subsequent trends End of negative interest rates (0% -> 0.1%) in March 2024, down about 23%.
Initial policy shift, market panic stabilizes.
Interest rate hike to 0.25% in July 2024, down about 26%.
Arbitrage trading accelerates closing positions, followed by entering into fluctuations.
Interest rate hike to 0.50% in January 2025, down about 31%.
Global liquidity tightening, BTC rebounds after hitting the bottom.
Interest rate hike to 0.75% in December 2025 (expected), currently has declined in advance, anticipating a B wave rebound of 'sell the expectation, buy the fact.'
Data source: Comprehensive analysis of historical market data and current research reports.
2.2 'Bad news landing is good news': The psychology of market gaming.
The most core characteristic of financial markets is 'foresight.' When everyone talks about how the Bank of Japan's interest rate hike will destroy the market, smart money has often already completed its portfolio adjustment.
Expectation saturation: The current prediction market (like Polymarket) shows an interest rate hike probability of up to 98%. This extreme consensus expectation means that 'bad news' has already been fully priced in.
Reflexivity theory: Soros's reflexivity theory tells us that market prices not only reflect fundamentals but can also influence fundamentals in return. The current decline itself releases risks and reduces leverage.
Foreknowledge: We often say 'good news landing is bad news' and vice versa. When the interest rate hike lands on December 19, as long as Kazuo Ueda's speech is not overly hawkish (for example, suggesting aggressive rate hikes in 2026), the market's tense nerves will instantly relax, and short covering will trigger a retaliatory rebound.
2.3 The Role of the Federal Reserve: Distant water cannot quench near thirst.
Although the market holds expectations for a Federal Reserve rate cut, as we pointed out in the daily report, 'the Fed's comprehensive expansion of the balance sheet will take time' [User Query].
The fog of employment data: Although the November non-farm payroll data slightly exceeded expectations, the unemployment rate rose to 4.6%, indicating a cooling labor market. While this supports reasons for rate cuts, the shadow of economic recession is also suppressing risk appetite.
Inflation stickiness: Core inflation remains stubborn, limiting the Federal Reserve's space for 'helicopter money.' Therefore, it is unrealistic to expect the Fed to immediately counteract the Bank of Japan's tightening; the market must rely on its own oversold rebound to repair technical indicators.
Chapter 3 In-depth Review of Bitcoin's Technical Aspects: Schiff Pitchfork and the B Wave Script.
3.1 Major Trend: The bear market is not over, target 70,000-80,000.
We must clearly recognize that we are still in a bear market cycle. The large-scale target for declines remains unchanged at 70,000-80,000 USD.
Weekly structure: After BTC broke through the key weekly support at 96,000 USD, this position has turned into strong resistance.
Liquidity vacuum: The main liquidity gathering area (Demand Zone) below is around 70,000-72,000 USD, which is the consolidation high for 2024 and the final destination of the large wave C.
However, a straight-line crash does not conform to market operating laws. The market needs to accumulate enough 'bullish liquidity' to complete the final crash. This is the necessity of the B wave rebound—creating the illusion of a 'bull market return' to lure retail investors to pick up the pieces and build a 'bull trap.'
3.2 Short-term Trading Logic: 4-hour Schiff Pitchfork.
At the current position, blindly chasing shorts has very low cost-effectiveness. The core technical shape we are focused on is the Schiff Pitchfork.
3.2.1 Technical Principles of Schiff Pitchfork.
The Schiff Pitchfork is an improvement on the traditional Andrews Pitchfork. When the trend is relatively gentle or in a corrective wave phase, the traditional pitchfork often becomes too steep to effectively envelop the price. The Schiff version builds a flatter channel by shifting anchor points, making it very suitable for capturing support levels in the complex adjustment structure of the B wave.
3.2.2 Current Market Analysis.
Red median line support: According to our chart analysis, the red median line of the 4-hour Schiff Pitchfork for BTC precisely intersects the 82,000 - 83,000 USD range [User Query].
Resonance signal:
Fibonacci retracement: This area overlaps with the 0.786 retracement level of the recent upward wave, making it a typical 'deep water rebound zone.'
Trading plan: Lightly position long orders in this range (82,000-83,000).
Stop-loss strategy: If the lower bound of the channel (approximately 78,000 USD) is breached, the logic becomes invalid, and strict stop losses must be implemented.
Profit target: The first rebound target looks at the 92,000-94,000 USD area (i.e., a pullback to the broken support level), completing the B wave structure.
3.3 Wave Theory Perspective: The Inevitability of the B Wave Rebound.
According to Elliott Wave Theory:
A wave (current): Whether falling from above 100,000 to the current 80,000 range, we are experiencing a sharp A wave decline. Market sentiment is extremely pessimistic, and leverage has been liquidated.
B wave (expected): After the A wave ends, there will inevitably be a B wave rebound. The B wave usually retraces 50% or 61.8% of the A wave's decline. For major funds, the B wave is the best time to re-establish short positions.
C wave (future): After the B wave ends, the market will welcome the main decline, C wave, at which point we will increase our position to short, targeting below 70,000.
Conclusion: The current long position is to better short at the future B wave high. We are bearish but will never become die-hard bears.
Chapter 4 Ethereum and Altcoin Strategies: Precise Targeting of Ethereum and ICP.
4.1 Ethereum (ETH): Weakness and Opportunities in Correlation.
Ethereum (ETH) has recently performed significantly worse than Bitcoin, which aligns with the characteristics of liquidity tightening cycles—funds first withdraw from high-risk altcoins and return to Bitcoin or fiat currencies.
Yesterday's review: The support level of 2900 mentioned in yesterday's report triggered a slight rebound, but the strength was insufficient [User Query]. This indicates that the market's buying willingness remains weak.
Correction strategy: Rather than gambling on a mid-mountain position, it is better to wait for more certain resonance points.
Resonance logic: Wait for Bitcoin to drop to the 82,000-83,000 Schiff median line support, and Ethereum will likely test its daily level Schiff Pitchfork red median line support simultaneously.
Point prediction: According to calculations, this support range is located at 2600-2700 USD [User Query].
Operational advice: Place pending orders to go long in the 2600-2700 range, and also implement strict stop losses. If Bitcoin rebounds while Ethereum does not follow, it indicates deeper fundamental issues with Ethereum, necessitating a swift exit.
4.2 Internet Computer (ICP): AI Narrative and Strong Demand Zone.
Among many altcoins, ICP (Internet Computer) deserves special attention.
Technical aspect: ICP is currently in a very strong Demand Zone (around 3.00 USD). This is a bottom structure that has been tested multiple times, offering an excellent risk-reward ratio.
Fundamentally driven: Unlike pure air coins, ICP is entering the AI computing field through projects like 'Caffeine AI.' Although the price is sluggish, on-chain development activity is active.
Trading logic: Lightly go long in the Demand Zone around 3.00 USD.
Stop loss: If it effectively breaks down below the support range (such as a daily close below 2.90), it means the bottom structure is damaged, and a stop loss must be implemented.
Nature: This is still 'betting on a rebound,' do not go heavy, do not develop faith.
Chapter 5 New Perspectives on Cross-Market Trading: The Safe Haven and Industrial Attributes of Precious Metals.
With the launch of forex and precious metals trading on the BG exchange, our trading toolbox has been greatly enriched. Compared to the pure liquidity gaming of cryptocurrencies, the precious metals market offers more trading opportunities based on real economy supply and demand.
5.1 Gold: Review after precise shorting.
In the previous daily report, we suggested a short strategy for gold at 4350, and today the market has shown a decent pullback.
Logical review: Gold previously faced strong resistance around 4385 and was suppressed by a rebound in the USD.
Future outlook: In the short term, gold remains constrained by the uncertainty of the Federal Reserve's rate cut schedule. If the Bank of Japan's interest rate hike leads to a dramatic fall of the USD against the JPY, it may indirectly impact the USD index, thus affecting gold. It is advisable to reduce positions and observe the support strength around 4270.
5.2 Silver: The Undervalued Industrial Giant.
Key focus: Tomorrow we will analyze silver in detail; I still strongly believe there is likely to be significant upside potential. Here is a brief preview.
5.2.1 Supercycle of Supply and Demand Mismatch.
Silver is different from gold; it is not only a monetary metal but also a key industrial metal. Silver is currently at the center of a 'perfect storm':
Photovoltaic demand explosion: The manufacturing of solar panels consumes a large amount of silver. It is expected that by 2027, the photovoltaic industry will consume over 20% of the global silver supply. As the global carbon neutrality process accelerates, this demand is rigid.
Electric vehicle (EV) revolution: Each electric vehicle uses far more silver than traditional fuel vehicles. As EV penetration increases, silver demand will continue to grow.
AI and computing infrastructure: AI data centers and high-performance computing hardware have extremely high conductivity requirements, making silver, the best conductive metal, indispensable in AI hardware infrastructure.
5.2.2 Supply Deficit and Inventory Emergency.
Continuous deficit: The global silver market has been in a state of supply shortage for five consecutive years, and it is expected that the gap will reach 117 million ounces by 2026.
Inventory depletion: The London Bullion Market Association (LBMA) and COMEX inventories are both declining, and there are even signs of physical delivery tensions.
Price outlook: Analysts generally predict that silver will challenge historical highs of 65 USD or even 100 USD in 2026.
Strategy forecast: The correction of silver is an excellent buying opportunity. Unlike the B wave rebound logic of Bitcoin, the rise of silver is supported by real industrial demand, possessing a more long-term trend.
Chapter 6 Trading Psychology and Risk Control: How to Survive and Profit in a Bear Market.
6.1 The Dialectical Execution of 'Mainly Short, Lightly Long.'
As we mentioned at the beginning: 'Stick to mainly short positions, with light long positions as a supplement.' This is not just a slogan but a strict rule of position management.
Mainly short: This means that at the high point of the B wave rebound (like BTC 92,000-96,000), we will invest heavily, as this aligns with the trend of the larger cycle, resulting in a high win rate and large risk-reward ratio.
Low leverage: This means that at the current support level (BTC 82,000), we are only investing with a light position. This is a contrarian trade aimed at preventing missing out on a rebound while also raising the safety cushion through profits. If the rebound fails, the light position stop-loss will not be detrimental.
6.2 Beware of the trap of 'bad news turning into good news.'
When the entire market is waiting for the Bank of Japan to raise interest rates to crash the market, the market often does not decline as desired.
Expectation management: We must think one step ahead of the market. If the market does not drop but rises after the interest rate hike on the 19th, do not be surprised; this is precisely the power of short covering.
Execution: If the price enters the 82,000-83,000 range, do not hesitate to go long due to panic; likewise, if the B wave rebounds to around 95,000, do not forget to short due to greed.
6.3 Adapting to the new market.
For forex and precious metals trading, due to their leverage mechanisms and volatility characteristics differing from cryptocurrencies (which are more directly influenced by macro data), I personally suggest giving more time for adaptation. Do not trade forex with the all-in mentality used for cryptocurrencies, and strictly control leverage.
Chapter 7 Summary.
The charm of the market lies in its certainty within uncertainty.
Uncertainty: The specific wording of the Bank of Japan, unexpected speeches from Federal Reserve officials, and geopolitical disturbances.
Certainty: The structure of wave theory (B wave must come), geometric support of Schiff Pitchfork, and physical gap of silver supply and demand.
As traders, we must utilize these certain technical structures to gamble on uncertain macro events.
Next steps guide:
Watch closely: Pay close attention to BTC's reaction at 82,000 - 83,000 USD.
Ambush: Place light long orders near ETH 2600 - 2700 USD and ICP 3.00 USD.
Stop loss: Set strict stop losses to protect the principal.
Mindset: Maintain a bearish outlook, viewing the rebound as an opportunity for better shorting in the future.
Bad news landing is good news; let us be foreseeing and ignite the spark of profit in the cold winter!
#加密市场观察 #日本加息 #美联储降息 $BTC $ETH $ICP
