The Fed is about to cut rates, while the Bank of Japan is preparing to hike rates—two major central banks making a U-turn at the same time, but in completely opposite directions. This policy hedging game is turning the global capital markets into a chaotic mess.

To be honest, after watching the interplay between macro liquidity and the crypto market for so long, I can confidently say: December 2025 will be a turning point. There’s an 84.9% probability that the Fed will cut rates by 25 basis points, and the chance of a rate hike by the Bank of Japan has already soared above 80%. The last time I saw such a split—actually, I don’t think I’ve ever seen such a divided move.

Let’s start with the Fed. The meeting is scheduled for December 9-10, and a rate cut is almost a done deal. But here’s the issue—this rate cut might be very “schizophrenic.” What do I mean? On the surface, they’ll loosen policy, but Powell will most likely pour cold water at the press conference, hinting not to expect too many cuts next year.

Why so conflicted? Because inflation hasn’t been fully tamed, and economic growth is starting to show signs of fatigue. Powell is like a tightrope walker right now, with price pressures on one side and recession risks on the other. Every move has to be cautious, for fear of making a misstep.

On the other hand, the Bank of Japan has been holding back for 17 years, and this time they really mean business. A historic rate hike is just around the corner, and the market is already betting on the exact timing.

What does this policy divergence really mean? Simply put, capital flows are about to be reshuffled. The US dollar’s rates may be heading lower but with tighter expectations, while the yen is about to leave the negative interest rate era behind. With these two forces intertwining, how BTC and ETH and other risk assets will move in the next six months will be crucial.