December 20, 2025

Yesterday, the US stock market opened strongly, and the Nasdaq index has already recovered all of this week's declines.

After the rate hike in Japan, everyone's attention has shifted back to the Federal Reserve's monetary policy.

Yesterday, the Bank of Japan announced a 25 basis point rate increase, raising the interest rate to 0.75%, the highest level in 30 years, marking Japan's exit from the low-interest-rate era and returning to a normal range.

Looking at the current interest rate policies of various countries:
USA: Cut by 25 basis points
UK: Cut by 25 basis points
Sweden: Cut by 25 basis points
Egypt: Cut by 25 basis points
Canada: Cut by 25 basis points
UAE: Cut by 25 basis points
Israel: Cut by 25 basis points
Japan: Hiked by 25 basis points

It can be seen that most countries are cutting rates, only Japan is raising.

Bank of Japan Governor Ueda Haruhiko hinted in his speech that there might be further rate hikes in the future, but no clear timetable was given; everything depends on economic data.

The market considers this a neutral to mildly hawkish stance, at least not an aggressive rate hike, and expects no new moves before March next year.

As I previously shared, this rate hike in Japan was already priced into the market. So, after the rate hike, the market actually rebounded slightly, and in the short term, it mainly depends on how US stocks perform.

From the perspective of Bitcoin's chip structure, it remains quite healthy. The chips held at high levels are not showing significant movement, indicating that most losing investors are still relatively stable emotionally, with little selling pressure.

Worth noting is that Tome Lee predicts: Bitcoin will reach $200,000 next year.

He believes that the fundamentals of cryptocurrencies are entering 2026 at a very high level, supported by two core factors:

First, US legislation is moving toward giving cryptocurrencies legal status.

Second, the smartest money on Wall Street is rushing into the market; they are not here to speculate on coins but to transform financial infrastructure.

He provided a data comparison.

Currently, there are about 4 million wallet addresses worldwide holding over $10,000 worth of Bitcoin.

However, there are 900 million personal retirement and brokerage accounts holding over $10,000 globally.

400 million versus 900 million—that's a huge potential.

As long as a small fraction of these 900 million accounts start allocating to crypto assets, the inflow of funds will be astronomical.

Therefore, he advises investors not to focus only on short-term price movements but to pay attention to the huge gap between 900 million and 4 million.

In the short term, December is the holiday season in North America, with Christmas and year-end vacations, which is typically the least liquid period for markets. Coupled with various macro events gradually unfolding, market volatility will increase.

But in the medium to long term, the main direction still depends on the Federal Reserve's monetary policy.

Currently, the Fed has shifted from monetary tightening to easing, with three consecutive rate cuts in 2025, plus balance sheet expansion, which will gradually improve market liquidity.

Recently, Fed Vice Chair Harker said that the recent inflation data is good, indicating that the US economy is healthy and stable.

He also mentioned that there will be large-scale tax refunds next year, creating a massive refund cycle, with money flowing back from banks to consumers.

Although this is not traditional quantitative easing, it is a way of injecting liquidity into the market.

Additionally, next year, Trump will have midterm elections, and he certainly won't let the US economy fall into recession or cause a stock market crash. This will require the Fed to cooperate by continuing to loosen monetary policy.

After the 2026 midterm elections, the US two-party system may face a political deadlock.

A deadlock means no one can make big moves; it will be difficult to pass aggressive new legislation, raise taxes arbitrarily, or implement strict regulations.

Financial markets fear uncertainty most; a deadlock implies policy stability, which is good for the market.