There are two major monetary policy events happening in December, moving in completely opposite directions, but both could shake up the crypto world dramatically.

First up: the December 10th FOMC meeting.
The expectation of a rate cut is already solid—the CME FedWatch tool shows the probability holding above 85%. A rate cut means looser USD liquidity, which would normally be bullish for risk assets like Bitcoin. The market should be celebrating.

But don’t get too excited yet.

The second event is even more critical: the Bank of Japan’s meeting on December 19th.
Kazuo Ueda has been hawkish lately, and the market is widely betting this will mark the end of the negative interest rate era, possibly even a direct 25-basis-point rate hike. If this happens, the yen will appreciate, triggering a chain reaction—the (Yen Carry Trade), where people have borrowed yen to buy USD for crypto and stocks over the past two years, will see massive unwinding. The pace at which this money exits could be much faster than the Fed’s liquidity injections.

Here’s the contradiction: the Fed wants to pump liquidity into the market, while the Bank of Japan is draining it.
And yen carry trades have always been a hidden liquidity pool for the crypto market. History shows it clearly—2016, 2022, and August 2024, every time yen carry trades unwind, Bitcoin has dropped anywhere from 20% to 50%. The lessons have been painful.

My personal judgment (just my own opinion):
If the rate cut lands on December 10th, it might just trigger a small rebound, or even signal a “buy the rumor, sell the news” moment.
If Japan really hikes rates on December 19th, it will most likely trigger a new wave of panic selling.

The real risk lies on December 19th, not the 10th.

My suggestion is to stay highly flexible before mid-December, keep plenty of cash on hand, and don’t go all-in trying to catch the bottom. In a bear market, good news often doesn’t help, but bad news hits especially hard.

What do you think? Is the Fed’s liquidity stronger, or is the yen carry unwind more ruthless?