According to Mars Finance, as observed by 4E, market sentiment suddenly turned cold on December 1, with Bitcoin briefly falling to $83,786, accumulating a nearly 30% drop from the early October peak. The core trigger comes from the sharp rise in expectations for the Bank of Japan's interest rate hike: traders are pricing in a 76% probability of a rate hike in December, and close to 90% for January next year. After Ueda Kazuo signaled “early tightening,” Japan's two-year government bond yield rose to a 16-year high, prompting funds to rapidly adjust for potential policy shifts. The expectation of rate hikes has backfired on global risk assets, and yen arbitrage trades are seen as a potential systemic risk point—market participants still remember the turmoil triggered by the yen's sharp rise in August, which led to a global chain dumping. Another significant impact comes from MicroStrategy (MSTR). The company announced the establishment of a $1.44 billion cash reserve and for the first time acknowledged the possibility of selling Bitcoin under certain conditions, shaking its core narrative of “never selling coins,” resulting in a drop of 12% at one point. Although it still increased its holdings by 130 BTC last week, the combination of debt pressure and market turbulence has made sentiment more sensitive. On the macro front, the probability of a 25bp rate cut by the Fed in December has risen to 87.6%, and QT will officially end today. Over the past two years, QT has withdrawn more than $2 trillion in liquidity, and the cessation of balance sheet reduction is viewed as a key event in this round of liquidity bottom, potentially alleviating short-term market panic. 4E comments: Expectations of a rate hike in Japan and MSTR's “coin sale” hint have triggered a rapid repricing of sentiment, compounded by declining volume and the looming risk of yen carry trades, leaving the short-term market still in a fragile range. The end of QT by the Fed is one of the few positive signals that will determine whether risk assets can enter a “policy buffer period.” Recovery of risk appetite will need to wait for the implementation of Japan's policies and the emergence of stabilization signals for BTC.
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