When global liquidity contracts: Bitcoin and the explosive trio of wages, inflation, and Japanese interest rates

The upcoming week will bring three decisive turning points for the global financial markets. The US non-farm payrolls data (Non-Farm Payrolls), the US CPI inflation report, and the anticipated rate hike by the Bank of Japan are all catalysts for a rapidly retreating tide of liquidity. Bitcoin, as an asset characterized by a four-week beta profile highly sensitive to liquidity fluctuations, is now caught in this broader macro dynamic, gradually losing its mythic status as a “safe haven.”

Non-Farm Payrolls: the delay that upends interpretation

September’s Non-Farm Payrolls report represents a unique case of informational anachronism. Originally expected in early October, the 48-day government shutdown delayed its release to today, turning this data into a “rearview mirror” reflection of the market from over three weeks ago.

Implications unfold on three fronts:

The economic community forecasts an average of 54,000 new jobs for September, a jump from 22,000 in August, though still consistent with a weakened labor market. Goldman Sachs, however, estimates a more bullish 80,000 jobs, creating a significant gap that the market will need to manage. This divergence helps fill the informational void accumulated during the weeks of government closure.

Of crucial importance are the retroactive revisions for July and August. Some observers note that the annual revision could reach up to 800,000 units. Such a drastic contraction of previous employment figures would completely redefine the Federal Reserve’s expected stance, opening the door to more decisive and frequent rate cuts.

Paradoxically, the decision-making utility of this report for the Fed remains limited: Chairman Powell described the current regulatory environment as “driving in fog.” The market may therefore react modestly, barring statistically significant surprises.

CPI and the grip of Japanese monetary tightening

Beyond wages, the true epicenter of the storm concentrates on two consecutive seismic shocks.

Inflation remains the Gordian knot in the US. The November CPI, delayed by the shutdown, will be released on Thursday. Expectations converge around a 0.3% monthly change, maintaining the annual figure around 3%. However, the risk is tangible: the prolonged absence of data could have masked an increase up to 3.1%. If these numbers exceed estimates, the Fed’s narrative would shift again toward a “hawkish” stance, further compressing easing expectations and tightening global financial conditions.

Inflation in services continues to be the main driver of this persistence, representing a persistent obstacle to the anticipated deflation.

The Bank of Japan’s December 19 decision marks a watershed. The market assigns a 94% probability to a 25 basis point hike, raising the policy rate from 0.50% to 0.75%. This increase is not an ordinary incremental step: it is the most significant annual rise in 35 years for the Japanese institution, marking the end of an era of ultra-expansive monetary policy. By 2025, cumulative hikes will reach about 0.5%, a tectonic shift in Japan’s financial structure.

The yen carry trade: the specter of synchronized liquidation

The impact of the Japanese rate hike transcends national borders, directly affecting the nerve center of global finance: the yen carry trade, a strategy established for decades among international investors.

The mechanism is simple yet powerful: financial actors borrow yen at minimal rates, convert them into dollars or other higher-yield currencies, and acquire US Treasuries, US equities, or even alternative assets like bitcoin. This flow has continuously fueled global liquidity.

The BoJ’s hike impacts on two complementary axes:

The increase in the cost of capital in yen immediately affects traders’ balance sheets. Simultaneously, rising rates usually strengthen the local currency, creating a divergence in exchange rates that exposes investors to significant currency losses. The combination of these factors triggers the imperative of “unwinding positions”: widespread sales of US stocks, government bonds, bitcoin, and other asset classes to reconvert into yen and repay loans.

This cascade of liquidations represents the most immediate and devastating macroeconomic risk for bitcoin. History provides clear precedents: March, July 2024, and January 2025 saw declines exceeding 20% coinciding with previous Japanese rate hikes.

However, according to CICC analysis, two factors mitigate the immediate shock: the hike has been largely priced in by market participants, and the current size of the carry trade remains below 2024 peaks. The real danger would emerge if the hike coincided with unforeseen macro events, such as an outsized CPI, creating resonance between widespread sentiment and algorithmic trading, amplifying downward pressure.

Bitcoin as a high-beta asset: when liquidity withdraws

In this environment of shrinking global liquidity, internal narratives for bitcoin—halving, spot ETFs—temporarily lose relevance. The price betrays the asset’s true nature.

From “digital gold” to speculative instrument: bitcoin has long been compared to gold. However, in this restrictive cycle, its correlation with Nasdaq technology stocks has aligned, exposing its essence as a highly liquidity-sensitive asset. In a regime of high real interest rates, bitcoin—lacking cash flows—suffers systemic loss of appeal.

Technical structure reveals extreme fragility. The price has contracted significantly from early 2025 highs, oscillating constantly below critical support levels. Sentiment indicators are in extreme fear territory. When the price fell below $86,000, the market experienced nearly $600 million in liquidations in 24 hours, mostly long positions, signaling a sweep of leveraged speculation and the extreme vulnerability of the market structure.

Institutional projections for Q1 have been harshly disproved. Major players expected bitcoin at $150,000 or even over $200,000 by year-end, anchoring their logic to ETF flows and Fed cuts. This gap from current reality highlights a fatal error: analyzing bitcoin outside the macro liquidity framework is a deadly misjudgment.

Possible developments and survival strategy

For the rest of the week, the market will definitively price bitcoin based on actual CPI and BoJ data, with three possible trajectories.

If CPI remains moderate and the Bank of Japan signals caution, the market might interpret this as the end of “bad news.” Bitcoin could technically bounce off current supports ($86,000-$88,000), but this would be a pause, not a structural reversal.

The combination of robust CPI and the BoJ hike as expected presents the maximum risk. In this scenario, bitcoin faces no resistance against a new bearish phase; breaking key supports could push the asset toward $78,000 or lower.

A third scenario—an “black swan” shock—could trigger a systemic risk flight. In such a case, bitcoin would lose all independence, following equities into a liquidity crisis spiral.

For investors, the wisest strategy remains “cash liquidity, defense before all else” until the Bank of Japan decision on Friday. The true market equilibrium point will only emerge once the panic of global liquidity contraction is fully priced in. Bitcoin’s revival will inevitably coincide with the Fed’s explicit pivot to accommodative policy and the complete unwinding of the global carry trade. Until then, any attempt to swim against the tide risks being overwhelmed by the retreating wave.