The Bank of Japan announced a rate hike of 25 basis points on Friday! A black swan has unexpectedly landed, and the market script for Thursday, December 25, may have already been set!
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The largest rate hike by the Bank of Japan in 30 years has failed to boost the yen, compounded by Trump's old posts triggering a massive shock in cryptocurrency, as global markets face dual blows of "policy shift" and "black swan" during the Christmas week. Be alert to the holiday liquidity trap; the curtain for 2026 may begin with a dance between the gray rhino and the black swan.
On December 19, Beijing time (Friday), after concluding a two-day monetary policy meeting, the Bank of Japan announced a policy rate hike of 25 basis points, increasing from 0.5% to 0.75%. This is the second rate hike since January 2025 and brings the country's policy rate to its highest level in 30 years since 1995.
This rate hike, commonly referred to as "historic" by the market, is set against the backdrop of persistently high inflation pressures within Japan. As of November, the core Consumer Price Index (CPI), excluding fresh food, has seen a year-on-year increase for 51 consecutive months, reaching 3.0%. The main purpose of the rate hike is to combat stubborn inflation and attempt to stabilize the persistently weak yen exchange rate.
Overall, in the last trading week of 2025, global markets will have to navigate a difficult balance between the "long-term pressure of monetary policy shift" and the "short-term shocks of unexpected risk events." For investors, maintaining vigilance, controlling leverage, and focusing on liquidity during seemingly calm holiday trading may be the most prudent strategy to cope with this "set script." The "gray rhino" of the global economy and the "black swan" of financial markets will dance together, and the opening of 2026 is destined not to be calm.
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