Federal Reserve's "Fake Printing" and Tokyo's Interest Rate Hike: Bitcoin Market Faces a "Blend of Ice and Fire" During Christmas

Brothers, on the morning of December 15, when Asian traders opened their candlestick charts, Bitcoin received a "head-cutting" blow from $90,000 straight down to $85,616, a 5% drop, leading to blood flow in futures accounts. Strangely, gold at the same time only dropped by one dollar, remaining steady as a mountain. No explosion, no negative news, and the main reason for this "silent killing" was the decision by the Tokyo central bank.
In the same week, the Federal Reserve still displayed "fake printing" — pumping $380 billion over ten days, while withdrawing $13.5 billion in reverse repurchase operations in a single day. This scene is like filling beer in your mouth and scratching your throat to vomit, settling for loneliness. The two central banks are in harmony, pushing Bitcoin into a dead-end of a "blend of ice and fire."
First, the Fed's "Split Mind" Game: Fake Printing, Genuine Market Support
Let's start with the big bank process. The government has been shut down for three months, Treasury debt has increased by $700 billion, and liquidity in the interbank market has shrunk to a desert. Small banks' borrowing costs are rising, real corporate loans are as hard as climbing to the sky, and people's wages have declined for three consecutive months — a "champagne at the top, cigarette meals at the bottom" model.
The Federal Reserve claims it has "ended QE(QT)", but in reality, it is authentic. On December 22, it pumped $6.8 billion in one day, totaling $380 billion over ten days. But did you notice? Why didn't the market move? Because these kids are chasing water with one hand and drinking with the other — where reverse repurchase volume (ONRRP) exceeded $13.5 billion in one day, a more violent withdrawal than printing.
The most exciting is the "Regular Bank Financing Plan (BTFP)", where a Citi analyst said: "This is just a cover for QE, and the result is very similar to directly buying government bonds." Water is pumped, but not a single drop reaches people's fields; it is all poured into Wall Street baths. The S&P 500 rises, gold jumps 68% over a year, and stablecoins on the network inflate to $230 billion — ammunition is ready, but the trigger is not in retail investors' hands.
This "left-right swap" game depends on: the Fed wants to support the financial system from collapse, while controlling inflation expectations; supporting the wealthy, and fearing the dollar will overflow and flood small shops on the streets. The result? Liquidity is precisely funneled into money trees for the rich, and those at the bottom gain nothing.
Second, the Tokyo Bell: Why "Choking Bitcoin with a Single Sword"?
Back to Tokyo. On December 19, the Bank of Japan raised interest rates to 0.75%, the highest in 30 years. Why can this simple 0.25-point adjustment cause Bitcoin to decline sharply?
Because the "Yen trading whale" woke up.
Over the past thirty years, the extremely low interest rate in Japan made global balance funds accustomed to a habit: borrowing yen almost for free → converting to dollars → buying high-yield assets (US bonds, US stocks, Bitcoin). This "perpetual motion machine" generated trillions of dollars. But with the rate hike on the yen, the rules of the game suddenly changed:
1. Rising borrowing costs: the previously free yen now requires interest, narrowing profit opportunities
2. Yen appreciation pressure: when borrowing yen against dollars, now you must unwind the position, selling assets for yen to repay debt
3. Bitcoin becomes the "first liquidity pond": traded 24/7, weak market depth, high leverage, and at close, it gets liquidated first
Historical data is horrifying: after the Bank of Japan raised rates in July 2024, Bitcoin dropped from $65,000 to $50,000 within a week, a 23% decline. In the previous three rate hikes, the average decline was over 20%. This 5% drop is just the beginning.
The most painful part is that gold only fell by one dollar, while Bitcoin collapsed by 5%. Where is the "digital gold" you promised? Brothers, times have changed.
Third, "Bitcoin Personality Collapse": From Rebellious Teen to Wall Street Puppet
After the approval of the direct investment fund in January 2024, Bitcoin was officially integrated into Wall Street. Companies like BlackRock and Fidelity listed Bitcoin in their portfolios, and pension funds and hedge funds follow traditional risk models.
The deadly transformation is that Bitcoin has become a high-risk tool, after being a safe haven asset.
Data speaks:
• Correlation with Nasdaq: from -0.2 to 0.2 before 2020, rising to 0.80 in 2025
• Volatility structure: aligned with tech stocks, losing resistance to macro events
• Ownership structure: whale holdings shrank, small and medium individual holdings increased, institutions gathered during corrections
This is not a panic sell-off, but a "generation switch." The early whales have handed their shares to the new generation of institutions, and Bitcoin is transforming from a "rebel against fiat currency" to a "liquidity lever in Wall Street."
On-chain data shows that $230 billion in stablecoins are lurking on exchanges, but no one dares to move. Because everyone knows Bitcoin has become the most sensitive and fragile link in the global liquidity chain. Decisions made in Tokyo's conference rooms can determine your account balance in an instant.
Fourth, the Christmas Market in Danger: Could the "Inevitable Rise" Break?
Since 1969, the Christmas market (last 5 days of the year + first two days of the new year) has achieved an average rise of 1.3%, and Bitcoin has celebrated annually. But this year, the rule may break.
The "double kill" model may form:
• From the Fed: "Fake printing" continues, policy signals are unclear. As Fotu mentioned, when the Fed is internally conflicted, historical rules often cease to work
• From Japan: They indicated continued gradual easing in 2026, and pressure to close trading positions could trigger a correction of up to 15% at any time
There are two scenarios:
Gentle version: The Fed buys $400 billion of government bonds monthly to fill liquidity gaps. Risk assets eat a little soup, and Bitcoin slowly climbs to $93,000, but don’t expect celebrations.
Extreme version: The Fed pumps over $600 billion monthly, flooding liquidity. Wall Street celebrates, and Bitcoin heads to new highs, but the cost is inflation explosion, credibility collapse, and Japanese rate hikes causing greater damage.
Crypto experts' opinion: The market is likely to follow a "sick" state. The Fear and Greed Index at 25, the market in extreme fear, as if the whole village is infected with flu and hiding under blankets. The key resistance level is $89,000; if it holds, we might see $93,000; if not, another rate hike in Japan could push it down to $80,000.
Fifth, Practical Advice for Brothers
Short-term (end of December - early January):
• Light trading: Christmas market unpredictable, contracts not exceeding 20%
• Watch two indicators: Fed reverse repo balance and bank reserve ratio, a decrease in the first and increase in the second indicate a soft QE4
• Set stop-loss: if not above $89,000, sell at $85,000; if it stabilizes, accumulate small amounts, target $93,000
Medium-term (Q1 2026):
• Hedge Japan risks: monitor Bank of Japan meetings (March, June), and reduce positions a week before rate hikes
• Watch stablecoins: $230 billion stablecoins are "fuel," wait for a new SEC official appointment or positive news from Biden
• Bond trap: do not consider Bitcoin as a safe haven asset; it is correlated with Nasdaq, and if US stocks fall, Bitcoin will not survive
Long-term:
• QE4 will eventually be implemented: with recession pressure, the Fed will have to buy bonds itself, just a matter of time. This is the ultimate good news for Bitcoin, but the road will be very bumpy.
Summary: In the transformation of old and new scenarios, survival is key
Brothers, Bitcoin has done nothing wrong; it is only paying the price for its "institutional founding" process. In the past, we focused only on on-chain data; now, we must monitor Tokyo, Washington, and Wall Street simultaneously.
This Christmas, instead of betting on market rise or fall, think carefully: when water pipes open and emergency pumps for the Fed operate, and Tokyo raises interest rates and your wealth disappears in a moment, are your assets in the pool or in the desert?
History will not repeat simply, but it is always astonishing in its similarities. In 2008, quantitative easing led to the emergence of Bitcoin, and in 2020, QE3 launched the institutional bull market. Today, "fake printing," despite its ugliness, has a clear direction — the financial system is collapsing from the ground up, and traditional rules are breaking. Amid the chaos of transitioning between old and new scenarios, some stubborn things will always be re-evaluated.
Survival is the way to see the next cycle.
Brothers, in your opinion, when will the Bank of Japan raise interest rates again? Will Bitcoin fall below $80,000? Share your thoughts in the comments! If you like this analysis, please like and share the post, so more brothers understand this grand game! And to get real-time on-chain data monitoring and Bank of Japan meeting alerts, don’t forget to follow "Crypto Discoverers" and leave a comment. We will continue in the next episode to reveal the secrets of global central banks! #东京加息 #美联储QE4 #比特币身份危机 #圣诞行情预测 #مخزون Stablecoins$PIPPIN