What will the policy divergence between the two major central banks bring to the crypto market?

Recently, there have been reports in the market that the Federal Reserve may announce an interest rate cut at its December 9-10 meeting, while the Bank of Japan plans to consider a rate hike on December 18-19. This policy "time lag" could bring a wave of volatility to the crypto market.

Let’s talk about the Fed first. If there is indeed a rate cut, market liquidity will increase. Historical data shows that in the three days following a rate cut, cryptocurrencies have averaged around a 15% gain. Bitcoin could potentially challenge the $100,000 mark, and some altcoins and meme coins are likely to rally as well. This period could be a short-term trading opportunity.

But don’t get too excited just yet.

If the Bank of Japan actually raises rates, things get more complicated. A rate hike means tighter liquidity, and a stronger yen could attract global funds back to Japan, creating a "drain" on the crypto market. Looking back at 2023, when the Bank of Japan made a surprise rate hike, Bitcoin dropped 18% in a single day. If it happens again, a drop of over 20% for Bitcoin isn’t impossible, and altcoins could fall even more.

So, the timing is crucial:

During the week of December 9 to 15, after the Fed rate cut, market sentiment should be relatively optimistic, and major coins may perform well.

But starting from December 16 onward, caution is needed. On the eve of the Bank of Japan’s meeting, the market will likely enter a wait-and-see mode. If a clear signal of a rate hike emerges, taking profits in advance may be the safer choice.

A few operational suggestions:

Short-term traders can consider positioning in major coins like Bitcoin and Ethereum within three days after the Fed’s rate cut, setting a 10% take-profit point—don’t get greedy.

If you’re worried about the risk of a Bank of Japan rate hike, you can hedge with options or futures to avoid losses from a one-sided drop.

One often overlooked point: pay attention to compliance for large transactions. Frequent transfers or large operations may trigger exchanges’ anti-money laundering monitoring. If your account gets frozen and you can’t withdraw your profits, that would be awkward.

This round of market movement comes with both opportunities and risks—the key is to manage the timing well.