The two most critical words for next year are: differentiation.

Central banks around the world are no longer moving in unison; the era of individual policies has arrived. Although the Federal Reserve is said to be lowering interest rates, the internal battle between hawks and doves is intense, making the pace of rate cuts unpredictable. The European Central Bank is likely to follow suit but will be more cautious. The Bank of Japan, on the other hand, is tightening its monetary policy; in Australia, inflation refuses to subside obediently, and there may even be a halt to rate cuts or discussions of rate increases.

This fragmented policy situation has multiple impacts on the crypto market.

**The rhythm of the US dollar determines the life and death of risk assets**

The seemingly complex global liquidity tightening and loosening can be most intuitively observed through the US Dollar Index (DXY). The logic is simple: if the pace of interest rate cuts by the Federal Reserve does not keep up with that of the European Central Bank, the dollar will strengthen, which directly suppresses the prices of risk assets such as cryptocurrencies; conversely, once the dollar weakens, liquidity flows into risk assets, supporting the crypto market. Therefore, monitoring every fluctuation of the dollar index essentially means reading market sentiment.

**The tightening of the central bank may trigger global funds to seek new outlets**

This perspective is easily overlooked. The Bank of Japan is tightening, which means that funds accustomed to profiting in Japan's low-interest environment suddenly have nowhere to stay. Where will they go? Of course, they will seek higher yield opportunities globally. Cryptocurrencies, as a relatively independent asset class, inherently possess the convenience of cross-border mobility, making it quite possible for this influx of funds.

**The sources of volatility are becoming increasingly diverse**

In the past, watching the Federal Reserve was enough, but now market fluctuations come not only from internal policy debates within the Fed, but also from the "policy conflicts" between the European Central Bank, the Bank of Japan, and the Reserve Bank of Australia. Any unexpected statement from a central bank could trigger a global chain reaction like a domino effect. This presents both a challenge and an opportunity for traders.

**How to operate in such a complex situation?**

First, broaden your perspective. Include the key meetings of the European Central Bank, the Bank of Japan, and the Reserve Bank of Australia in your observation list, and don't just focus on the Federal Reserve. Secondly, make good use of the U.S. Dollar Index; it can help you quickly assess the short-term market direction. Finally, you need to have discernment, distinguishing which central bank's "easing" is genuine and capable of generating real buying interest, and which are just superficial statements.

The era of a single central bank dominating the market has come to an end. To thrive in the crypto market in 2026, one must have a global mindset and sufficiently flexible coping strategies. Only by finding the right pulse in this seemingly chaotic policy environment can one seize the real opportunities.