December’s financial markets are putting on a surreal show.

On the Federal Reserve’s side, the long-anticipated rate cut is about to drop. The market’s response is clear—there’s a 90% probability pricing in a 25 basis point cut this month. Weak employment data, a collective shift among Wall Street analysts, and dovish expectations are written all over their faces.

What does this mean for the crypto market? The answer lies in history. Rate cuts usually mean more liquidity, and when liquidity eases, risk assets get restless. Bitcoin’s “digital gold” narrative becomes especially useful at this time—a new round of stories about hedging against currency devaluation can be told. The UAE sovereign wealth fund throwing hundreds of millions into Bitcoin ETFs is a signal in itself.

But why is the price of Bitcoin stuck at the $90,000 mark, not moving up or down? Because the good news has already been priced in. Now the market fears another scenario: the Fed cuts rates but adopts a hawkish tone, telling you “don’t expect more after this.” If that happens, short-term sentiment will immediately collapse. The Fear & Greed Index remains in the “Fear” zone—everyone is waiting for confirmation.

Meanwhile, in Japan, the tone has completely shifted.

The Bank of Japan’s governor has taken a hard line recently, with the market pricing in over a 76% chance of a rate hike in December. Core inflation continues to overshoot, and the era of negative interest rates may truly be coming to an end.

How intense is the reaction? The yen is surging, Japanese stocks are plummeting, and Japanese government bond yields have hit multi-year highs. Even more critical, if Japan really does hike rates, the decades-old “yen carry trade” could collapse. What does that mean? For years, global investors borrowed cheap yen to buy other assets, but now the yen isn’t cheap anymore and the math must be redone. If capital flows are rearranged, it will affect more than just Japan.

One side is flooding the market, the other is draining it. The Fed and the Bank of Japan—one wants to stimulate the economy, the other wants to rein in inflation—their directions are completely opposite.

Where will this “liquidity gap” push capital? From the current trend, Bitcoin is shifting from a niche asset to a mainstream portfolio option. The tide of central bank policy shifts has arrived. Whether the crypto market will be propelled to new heights depends on these two meetings in December.

The real question isn’t whether change is coming, but how fast it will happen.