4E: Japan's interest rate hike expectations trigger a chain reaction, Bitcoin falls below 84,000, and the end of QT by the Federal Reserve becomes a key variable
According to 4E observations, market sentiment suddenly turned cold on December 1, with Bitcoin briefly dropping to $83,786, a nearly 30% decline from the early October peak. The core trigger came from a sharp rise in expectations for a rate hike by the Bank of Japan: traders priced in a 76% chance of a rate hike in December, and nearly 90% for January next year. After Ueda Kazuo signaled "preemptive tightening," Japan's two-year government bond yield rose to a 16-year high, and funds began to rapidly adjust for a potential policy shift. The rate hike expectations have backfired on global risk assets, with yen carry trades seen as a potential systemic risk point—markets still remember the turmoil caused by the yen's sharp rise in August this year, which triggered a global chain sell-off.Another heavy blow came from MicroStrategy (MSTR). The company announced a cash reserve of $1.44 billion and for the first time acknowledged the possibility of selling Bitcoin under certain conditions, shaking its core narrative of "never selling." The stock plummeted by 12% at one point. Although it still increased its holdings by 130 BTC last week, the pressure from debt combined with market turbulence has made sentiment more sensitive.On the macro front, the probability of a 25bp rate cut by the Federal Reserve in December rose to 87.6%, and QT will officially end today. Over the past two years, QT has withdrawn more than $2 trillion in liquidity, and stopping the balance sheet reduction is seen as a key event for the current liquidity bottom, which may help ease short-term market panic.4E Commentary: The expectations of a rate hike in Japan and MSTR's "selling" hint have triggered a rapid repricing of sentiment, compounded by declining trading volumes and the looming risk of yen carry trades, leaving the short-term market in a fragile range. The end of QT by the Federal Reserve is one of the few positive signals, which will determine whether risk assets can enter a "policy buffer period." A restoration of risk appetite will need to wait for the implementation of Japanese policies and a stabilization signal from BTC to resonate.
