The naive can collapse.

The probability of the Bank of Japan raising interest rates in December has been rising these days and has reached 80%. I believe everyone should be aware through various financial bloggers that the Federal Reserve is also likely to cut interest rates in December, and now the Bank of Japan's interest rate hike is at 80%, which will lead to a sharp reduction in interest rate differentials, resulting in concentrated liquidation of carry trades, which will impact the US stock market and various cryptocurrency markets.

Of course, some people say that the Bank of Japan has been talking about raising interest rates for a long time, and it has already been priced in, so the impact won't be too great.

But what I want to say is that the return of the Bank of Japan's interest rates to neutrality is itself a groundbreaking event, as they have been playing with low interest rates for 35 years. However, their core CPI is currently on an upward trend, exceeding 2%, and even reaching 3% in October. At this time, they have the confidence to initiate such a rate hike.

Returning to a neutral interest rate means raising the current interest rate level from 0.5% to a range of 1% to 2.5%. This is a historic change; Japan has long played the role of a low-interest funding faucet. Even during periods of rate increases in the US, the world hasn't been short of liquidity. In the US, once there are expectations of rate cuts, all markets soar. However, this faucet is showing signs of closing, and this is the first time in over thirty years that there is no experience to deal with such an event.

Although the Federal Reserve will announce interest rates on December 11, it is highly likely to cut rates, which can provide some positive support for various markets in the short term and may allow for some upward movement. Once the Bank of Japan makes a decision to raise interest rates and further increases rates, the first half of 2026 may not be favorable, whether for US stocks, cryptocurrencies, or even A-shares, which may experience a relatively deep pullback, although it won’t be as severe as the black swan event caused by the pandemic on March 12, 2020.

From December to the first and second quarters of 2026, and even into the third quarter, it will be a time of hellish difficulty for speculation; it is recommended that most people restrain themselves and observe.

Be patient and wait for the time when various positive resonances arrive.

Every year there will be simple moments; it's unnecessary to stubbornly push through to gamble on the highs and lows, as that is very childish. Perhaps, in the very short term, a rate cut by the Federal Reserve, along with the release of positive PCE data tonight, could give a boost to the US stock market and various cryptocurrencies, but once we approach the Bank of Japan's interest rate decision, it is advisable for everyone to be cautious.

Above

Follow Lao Xu for further in-depth updates.

BTC, ETH, SOL