December 14 Morning Report Strategy Analysis

On Saturday, the entire day revolves around small interval fluctuations. The recent “chicken rib market” in the cryptocurrency market has left countless investors feeling anxious. The rise lacks momentum, and the drop does not show a clear direction. Behind this grinding fluctuation is the ongoing uncertainty of global macro policies stirring market sentiment. The Federal Reserve's decision to cut interest rates by 25 basis points in December has already been settled, but the internal divisions within the decision-making body and the market's preemptive speculation on maintaining interest rates in January have cast a shadow over expectations for liquidity easing. The most closely watched variable at present is undoubtedly the upcoming Bank of Japan monetary policy meeting — next Thursday to Friday (December 18 to 19). This last meeting of the year is widely viewed by the market as the “judgment moment” for the Bank of Japan to start raising interest rates. Furthermore, there are reports that this rate hike is basically a done deal. Bank of Japan Governor Kazuo Ueda is expected to emphasize that the domestic actual borrowing cost remains negative, to support the rationale for further rate hikes. Yibo will continue to track the implementation of Federal Reserve policies, institutional fund flows, changes in on-chain data, and other core signals, providing real-time updates on layout strategies and target dynamics.

It is necessary to clarify the relationship between Japan's long-term low-interest rates and the cryptocurrency market. Since the 1990s, Japan has maintained a zero interest rate and even negative interest rates for a long time, making the yen a global cheap financing currency and giving rise to large-scale carry trades — investors borrow yen at low interest rates and invest in cryptocurrencies and other risky assets to earn interest differentials. This type of trading has continuously injected liquidity into the global market and is an important source of funds supporting the prosperity of crypto assets. Logically, a rate hike in Japan would indeed impact the cryptocurrency market. A rate hike will increase the cost of yen financing, squeeze the profits from carry trades, strengthen expectations for yen appreciation, and force investors to concentrate on closing positions and selling off cryptocurrencies and other overseas assets to repay debts, leading to a global liquidity contraction. Cryptocurrencies, as high-risk high-leverage assets, are likely to become the first choice for liquidation, triggering price volatility. Rationally viewing this variable, it is important to be wary of selling pressure while paying attention to expectation digestion and the hedging effect of Federal Reserve policies. In the current market environment, focusing on changes in liquidity and shifts in sentiment is key. Short-term volatility in the cryptocurrency market is inevitable, but a trend reversal still requires the resonance of multiple core variables.