#HasTheMarketBottomed?

The Bank of Japan’s “historic rate hike” enters the countdown, becoming the market’s sole guiding force

The Bank of Japan’s monetary policy meeting on December 18–19 has officially concluded, with the Policy Board unanimously approving a 25 basis point rate hike to 0.75%—the highest level since 1995. Earlier, Japan’s quarterly short-term outlook survey showed large manufacturers’ confidence rising to a four-year high, alongside strong wage growth, further justifying the decision to tighten policy.

Following the announcement, yen carry-trade funds continued to unwind, global risk sentiment turned more cautious, and the short-term independence previously shown by the crypto market began to be questioned. Market focus has now shifted to guidance on the Bank of Japan’s future rate-hike path, which has become the core driver behind the crypto market’s decline since December.

The market has clearly transitioned from a phase of “high-level consolidation” to an “event-driven downtrend.” Recent sharp intraday moves are not merely technical corrections but confirmation signals of a broader trend. This reflects a tug-of-war between short-term technical oversold conditions and expectations of continued macro liquidity tightening. While oversold conditions may spark temporary rebounds, tightening liquidity expectations remain the dominant force shaping the overall direction.

At this stage, the decisive factor is the Bank of Japan’s policy decision and the tone of its statement (expected to be released this afternoon, Beijing time), which will likely determine today’s and this week’s market direction.

In addition, the convergence—or lack thereof—of signals from the U.S. Federal Reserve is equally critical. Diverging views among Fed officials mean that whether a unified policy stance emerges will directly influence the liquidity environment for risk assets. At the same time, year-end liquidity tightening pressures persist, with institutions taking profits at key levels and early signs of capital outflows from digital asset funds, potentially amplifying short-term volatility.

In summary, the market is currently at a critical juncture dominated by expectations of external monetary tightening. While long-term capital accumulation has created a potential “moat” for the market, the short-term trend has largely been set by the Bank of Japan’s policy shift. Short-term strategies should remain extremely cautious: reduce trading frequency, wait for clear trend confirmation after key price breakouts, and look for more precise opportunities only after clearer signals from the Federal Reserve and stabilization in year-end liquidity conditions.