The recent changes in central bank policies are enough to shake up the entire market.

Japan has already made its stance clear. The 25 basis point rate hike on December 19 is almost a done deal, with the probability soaring to 98%. Once implemented, Japan’s benchmark interest rate will rise to 0.75%, hitting a new high since 1995. The over thirty-year era of ultra-low interest rates is about to become history.

But the impact on the US market cannot be underestimated. Japan is the largest foreign holder of US debt. Once the rate hike occurs, Japanese investors’ arbitrage motivation will increase—why stick to US bonds? Wouldn’t it be more profitable to move funds to Japan for higher interest? If capital flows back on a large scale, US Treasury yields will inevitably rise, directly hindering the Federal Reserve’s plans to cut interest rates.

At the same time, the selection of the Federal Reserve Chair is also creating uncertainty. Trump has recently been vocal, saying he is interviewing three to four candidates and will decide on the successor to the current Chair within a few weeks. Names like Waller, Boman, Hasset, and Waugh have surfaced, becoming hot topics of discussion. It’s hard to predict what policies the new Chair will bring.

This creates an interesting situation: the Bank of Japan is pushing up interest rates in front, while the Federal Reserve is still debating whether to cut rates behind the scenes, and the uncertainty over leadership changes adds another layer of unpredictability. During this policy vacuum, market volatility is naturally high. The recent sharp fluctuations in the market are, to some extent, the result of these factors in play.

What are your thoughts on the upcoming trend? How will the divergence in central bank policies affect the performance of digital assets?