Welcome to the US crypto news morning update – your essential overview of the key crypto developments for the coming day.
Take a coffee, because today's morning update is not just about interest rates. It's about leverage, funding, and which side of the Pacific Ocean truly sets the pace for risky assets as policies diverge. While one central bank is easing (the US), the other is tightening (Japan). The tension between the two is starting to change global liquidity in ways that you can't simply see in one chart or price movement.
Crypto news of the day: Japan raises rates, The Fed lowers, which direction has more impact
Global markets are at a crossroads, with a rare and significant difference in policy. On one side, the U.S. Federal Reserve has begun cutting rates to support sluggish growth. At the same time, the Bank of Japan (BOJ) is going in the opposite direction and raising rates to levels not seen in thirty years.
The question for investors is no longer whether these steps make a difference, but which ultimately has more impact on global liquidity, currencies, and the crypto market.
On December 19, the BOJ raised the policy rate by 25 basis points to 0.75%, the highest level since 1995. This is again a step away from decades of extremely loose monetary policy. Macro analysts see this step as more than a standard adjustment.
In contrast to the Federal Reserve's rate cuts, intended to gradually ease economic dips, the tightening in Japan is structural. For nearly 30 years, Japan's near-zero interest rates have provided one of the main sources of cheap leverage in the world.
Even small increases now have significant consequences, as they affect lending strategies deeply rooted in global markets.
The direct impact was most clearly visible in the currency market. Despite the historic increase, the yen initially weakened because Governor Kazuo Ueda provided little clarity on the pace of future tightening.
According to Reuters, the yen fell because the BOJ remained “vague about future tightening.” This shows that forward-looking communication, not just the rate increase itself, remains crucial.
Yet analysts argue that the real effect lies elsewhere: in the yen carry trade, according to a recent U.S. crypto news article.
As Japanese rates rise and the interest rate differential between the U.S. and Japan narrows, it becomes increasingly expensive to invest in higher-yielding assets with borrowed yen.
Here is where the difference between Tokyo and Washington becomes really important:
Fed rate cuts usually support markets slowly by making credit easier.
The BOJ's tightening forces much faster adjustments because borrowing becomes more expensive.
The crypto market often feels these kinds of changes faster than traditional assets. Previous cycles of BOJ tightening were accompanied by sharp Bitcoin declines of 20–30% as liquidity decreased and carry trades were unwound.
This pattern makes the recent stability of Bitcoin even more remarkable. At the time of writing, the BTC price was $88,035, nearly 1% up in the last 24 hours.
“History shows that every previous tightening by the BOJ led to 20–30% Bitcoin declines when yen carry trades were unwound and liquidity tightened. But now that the increase has been fully absorbed and BTC remains around $85k–$87k, this could be the dip buyers were waiting for,” wrote analyst Blueblock.
Yet resilience at the top of the crypto market does not mean that there are no risks elsewhere. Altcoins, which are much more sensitive to liquidity, remain vulnerable if Japanese tightening continues.
BOJ officials have even clearly indicated that they want to continue tightening if wage increases and inflation persist. Analysts from ING and Bloomberg warn that further increases may not come immediately, but the direction is clear.
The consequences for global markets are clear. Fed cuts may provide slow support, but the unwinding of Japan's loose policy directly impacts the foundation of global leverage. If the BOJ continues this course, the impact on liquidity, currencies, and crypto may be greater than the easing in the U.S., at least in the short term.
Chart of the day
Here is an overview of more U.S. crypto news to follow today:
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Crypto stocks pre-market overview
CompanyAt close on December 18Pre-market overviewStrategy (MSTR)$158.24$163.97 (+3.62%)Coinbase (COIN)$239.20$246.00 (+2.84%)Galaxy Digital Holdings (GLXY)$22.51$22.95 (+1.95%)MARA Holdings (MARA)$9.69$9.87 (+1.86%)Riot Platforms (RIOT)$13.38$13.73 (+2.62%)Core Scientific (CORZ)$14.56$15.04 (+3.30%)
Crypto stocks market open race: Google Finance
