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Overall Market
Data source: TradingView
In our prior report, we emphasized the significant impact of the upcoming Federal Reserve and Bank of Japan decisions on global markets, particularly Bitcoin (BTC). We advised traders to closely monitor these events and anticipate heightened volatility.
On Wednesday, the Federal Reserve implemented a widely anticipated 25-basis-point rate cut, lowering the federal funds rate to a target range of 3.50%-3.75%. Fed Chair Powell's remarks proved less hawkish than markets had feared, prompting a rally in risk assets. The Dow Jones Industrial Average surged nearly 500 points, closing near record highs. BTC briefly broke above the $93,000 resistance level we highlighted in recent analyses. However, the initial gains reversed post-announcement, with BTC dropping below $90,000 during Asian trading hours. The U.S. 10-year Treasury yield held steady at approximately 4.16%, indicating that investors remain skeptical of the dovish signals.
A key driver of this bearish reversal was the Fed's updated dot plot, which projects only one additional rate cut in 2026, below market expectations of two. This reinforces a restrictive monetary policy stance, prompting investors to reduce exposure to liquidity-sensitive risk assets.
Additionally, the approximately 80% probability of a Bank of Japan rate hike next week introduces further headwinds for risk pricing. Since 2007, the BoJ has served as a major global liquidity provider. Its initial hike in mid-2024 triggered a massive yen carry trade unwind, inflicting substantial market disruption. The January 2025 hike similarly exerted downward pressure. Investors are now bracing for this upcoming move.
Seasonal factors compound these pressures. Historical data shows thinned liquidity during the Christmas period, hindering momentum building. We also expect a shift toward cash holdings by year-end, draining capital from markets.
Nevertheless, our desk maintains a bullish outlook for BTC in Q1 2026, supported by the following factors:
The Fed's recent 25-basis-point cut, coupled with confirmation that rate hikes are off the table, sets a data-dependent path forward. Current indicators show U.S. inflation firmly under control, bolstered by declining oil prices.
The Federal Reserve concluded quantitative tightening on December 1 and initiated T-bill purchases at an initial $40 billion, signaling an easing of liquidity conditions.
The BoJ's anticipated rate hike is expected to have a muted global impact, as markets have been well-prepared throughout 2025 and are positioned to absorb it with minimal disruption.
U.S. lawmakers are urging the SEC to modernize regulations, enabling Bitcoin and crypto inclusion in 401(k) retirement plans. Congress is also pushing to expand the "accredited investor" definition to encompass more everyday workers. SEC Chair Atkins has indicated support through his "Project Crypto" initiative, promising greater regulatory clarity.
An increasing number of U.S. banks are enabling crypto trading for clients, while wealth management firms are actively recommending BTC and other digital assets in portfolios.
In summary, we anticipate improving global liquidity conditions and accelerating developments in crypto investment infrastructure, drawing substantial capital into the sector. These dynamics will generate bullish momentum for BTC following the holiday season.
Bitcoin ETF Tracker
The above table shows the daily BTC spot ETF net inflow data for the past five trading sessions.
This week, U.S. spot Bitcoin ETFs recorded a net capital influx of approximately $175 million, against the backdrop of the Federal Reserve's 25-basis-point rate cut on Wednesday. This cut, paired with the launch of a $40 billion U.S. short-term Treasury (T-bill) purchase program, bolstered market liquidity and motivated investors to allocate more to risk assets.
However, sentiment reversed sharply during the Asian morning session on Thursday, December 11, as investors downplayed the rate cut's bullish signals and zeroed in on the Fed's dot plot, which projects only one additional cut in 2026 alongside a higher neutral interest rate. Anticipation of the Bank of Japan's rate hike next week further weighed on markets, culminating in a global tumble. Oracle's stock plunged over 11% amid disappointing earnings and AI spending concerns, amplifying bearish AI sentiment and driving broader market sell-offs in the Asian session.
Macro at a glance
Weekly Macro Highlights (December 4-December 10, 2025)
Thursday, December 4:
US initial jobless claims fell to a new low of 191,000, with continuing claims dropping to 1.939 million, both outperforming economists’ forecasts.
The seasonally adjusted Ivey PMI in Canada declined to 48.4 from 52.4 in October, missing the expected 53.6 and marking the first contraction since May. Trade tensions, including ongoing U.S. tariffs, contributed to the decline in output and new orders.
Friday, December 5:
Canada’s unemployment rate improved to 6.5% in November, better than the forecasted 7.0% and October’s 6.9%. Employment surged by 53,600 jobs, significantly exceeding the expected decline of 1,500.
The US PCE price index showed a 2.8% annual increase in September, in line with expectations, while the Core PCE rose 2.8%, slightly below the forecasted 2.9%, indicating inflation is easing.
Monday, December 8:
Japan’s Q3 GDP contracted 0.6% quarter-over-quarter, worse than the anticipated 0.4% decline. However, the GDP price index accelerated to 3.4% annualized growth, surpassing the forecasted 2.8% and revised up from 3.3% in Q2. Elevated inflation is prompting the Bank of Japan to consider an interest rate hike next week.
Tuesday, December 9:
The Reserve Bank of Australia held its interest rate steady at 3.60%, as expected, emphasizing the ongoing battle against high inflation.
US JOLTS job openings for September remained robust at 7.658 million, well above the forecasted 7.2 million, with October’s figure at 7.67 million, underscoring strong labor market demand, despite the drop in the hiring number.
Wednesday, December 10:
The Bank of Canada maintained its interest rate at 2.25%, in line with market expectations.
The Federal Reserve cut its federal funds rate by 25 basis points to a 3.5%-3.75% range—its third cut in 2025. Chair Powell’s remarks were less hawkish than anticipated, ruling out further hikes and noting some officials favor pauses amid labor market concerns. US equities rallied sharply, with the Dow rising nearly 500 points to near record highs. Asian markets showed mixed reactions the following day, while US futures gave up most gains. Bitcoin surged above $94,000 ahead of the Fed announcement but retreated below $90,000 post-cut, down approximately 3.4% in early Asian trading.
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