The cryptocurrency market is suspended between hope and fear. The past two weeks have brought renewed optimism, as… The total market capitalization of cryptocurrencies It formed two higher lows, marking the first break of resistance in more than a month.
It is worth noting that this jump represents the return of approximately $350 billion to the market. This is strong liquidity, especially with the Fed ending QT policy. For this reason, analysts now believe that this could be an early signal of the next easing cycle.
But have feelings really shifted from hope to greed? Without it, a rally is still unlikely.
But as volatility increases around the key market area, analysts are beginning to warn against being drawn into “blind” optimism.
Japan’s actions are sending ripples through global markets
Japan is central to the global economy for several reasons.
To begin with, it is the fourth largest economy in the world, with a nominal GDP of $4.28 trillion in 2025. Moreover, Japan has about 12% to 15% of the GDP. US Treasury bondsMaking it the largest foreign holder.
In essence, its economic size and Treasury influence means that the movements of the Bank of Japan (BOJ) ripple through global markets. Against this background, the latest $135 billion in incentives The Bank of Japan’s decision, which sparked market talk, was not just a coincidence.
Source: Trading View
In this context, the Japanese government subsequently launched a stimulus package worth $135 billion Inflation in October It was lower than expectations at 3%. The short-term market reaction was bullish, driven by expectations of enhanced liquidity.
Looking ahead, markets expect there is an 80% chance of a rate hike on December 18-19. Bank of Japan meetingWhile the 30-year Japanese Treasury bond yield of 3.43% increases pressure on long-term borrowing costs.
In short, Japan is under increasing financial pressure. With huge debt burdens, high interest rates, and rising yields, the cost of holding cash in Japan is rising. As the largest holder of the US Treasury, could Japan be the same? Forced to sell?
Japan’s financial pressures are now becoming a problem in the US market
Volatility in Japan extends to US markets.
In context, Japan has the highest rates Debt to GDP ratios In the world. Its debt exceeds 200% of GDP. Consequently, this limits Japan’s ability to raise cash through borrowing, prompting the Bank of Japan to look for alternative options.
One option is to adjust prices. The recent stimulus has added to the pressure, making a rate hike at the Bank of Japan’s next meeting very much a consideration. What impact will this have on US markets? Expensive leverage can force liquidation.
Source: X
As mentioned earlier, Japan is the largest holder of US Treasuries, holding more than 12% of total foreign holdings. If Japanese interest rates rise, the risk of a broad sell-off in Treasuries will increase, which is exactly what the analyst highlights in the chart above.
Simply put, money that was once flowing from Japan into US stocks or cryptocurrencies could start moving in the other direction. Investors who borrowed cheaply in Japan may be forced to unwind their positions when leverage becomes more expensive.
In short, the overall volatility of cryptocurrencies has not yet been settled.
Federal Reserve Bank The temporary pause in QT enhanced risk appetite in the short termBut with Japanese financial pressures now spilling over into US markets, the real question is: Can this environment really support risk assets over the long term?
Cryptocurrency rebound continues to face macro headwinds
The cryptocurrency market is still stuck in indecision.
However, expectations of quantitative easing have pushed new liquidity into the space over the past two weeks. In addition to this momentum, Possibilities of rate reduction Interest rates for the upcoming FOMC meeting rose to a monthly high of 89%.
All of this has helped fuel a clear short-term bullish bias. takes Bitcoin [BTC]For example. The 8% rally over the past two days erased a two-week decline, pushing it back above the $93,000 mark.
Source: TradingView (BTC/USDT)
In short, the recent crypto rebound is still highly dependent on macro trends.
Now, with US markets absorbing pressure from Japan, cryptocurrencies are in a fragile position. In such circumstances, it is something else Flash crash cannot be ruled outEspecially in light of the increasing influence of the Bank of Japan on US markets.
Against this backdrop, the upcoming Bank of Japan meeting on December 18-19 could set the tone for the cryptocurrency market. How investors react to a potential rise in interest rates will likely determine whether BTC can surpass $100,000.
Final thoughts
- Japan’s financial pressures are spilling over into US markets, creating uncertainty about risky assets.
- Cryptocurrencies’ short-term gains are driven by overall liquidity, but Japan-related volatility leaves the market vulnerable to another flash crash.
