In 2026, the trajectory of the crypto market may depend on a trans-Pacific policy dialogue. On one side is the Bank of Japan's firm stance on raising interest rates, while on the other side is the high likelihood of the Federal Reserve cutting rates—these opposing forces directly affect global liquidity supply and influence whether digital assets can break through the barriers.

From Japan's perspective, the situation is relatively clear. Against the backdrop of persistently high inflation, the Bank of Japan aims to normalize monetary policy. Even though the Prime Minister leans toward a more accommodative stance, this central bank is determined to continue raising interest rates in 2026, targeting a neutral rate of 1%. Once this process begins, global liquidity will be continuously drained, and the crypto market will naturally bear this pressure.

On the Fed's side, it's a different story. Mainstream institutions predict 2 to 3 rate cuts in 2026, with Goldman Sachs and Morgan Stanley even betting that the first cut will happen as early as June. The Trump administration also considers the mid-term elections, which could further encourage the Fed to loosen monetary policy.

The question is: with these two major central banks operating in opposite directions, is the crypto market gaining or losing? The key lies in which side's influence is stronger. If the Fed's rate cuts are large enough to offset the "bloodletting" effect of Japan's rate hikes, then digital assets might get a breather; but if the Bank of Japan accelerates rate hikes and the Fed's cuts are delayed or limited in scope, the crypto market will face pressure from both ends, with a significant increase in the risk of decline in 2026.

Investors should instead focus on the changes in the US-Japan interest rate differential rather than just watching a single central bank's moves. A narrowing interest rate spread means reduced attractiveness of yen arbitrage trading, which would naturally lessen the impact on the crypto market. This is the real barometer that needs close monitoring.