As Asia’s trading day began on December 10, 2025, a curious split in global risk sentiment unfolded. While major regional stock markets slid into the red, Bitcoin managed to push back above $92,000, showcasing a tentative but clear divergence between cryptocurrency and traditional finance. This cautious optimism in digital assets is almost entirely pinned to one event: the widely anticipated interest rate decision from the U.S. Federal Reserve, due later today.
The Single Catalyst Driving All Markets
All eyes are on Washington, where the Federal Open Market Committee (FOMC) is set to conclude its final policy meeting of the year. Market pricing leaves little room for surprise, with tools like the CME FedWatch indicating an overwhelming probability—around 89.4%—that Chair Jerome Powell will announce a 25-basis-point rate cut. This would be the third consecutive cut, following moves in September and October, bringing the benchmark federal funds rate down to a target range of 3.50% to 3.75%. For risk assets like cryptocurrencies, the mechanics are straightforward: lower interest rates generally reduce the appeal of holding cash or safe government bonds, potentially driving liquidity toward higher-growth, higher-risk investments. As one analyst bluntly put it regarding a potential cut, “If you think this is not bullish for Bitcoin and risk assets, you are not paying attention”.
Why Asian Equities Are Singing a Different Tune
If the rate cut is so certain, why are Asian markets like Hong Kong’s Hang Seng and South Korea’s Kospi trading lower? The answer lies in the nuance of the Fed’s message. This meeting is widely characterized not by the cut itself, but by what comes after—a likely “hawkish cut”. This term describes a scenario where the Fed lowers rates but couples it with strong guidance that the easing cycle may be over, signaling a high bar for any future reductions. This uncertainty about the future path of policy is causing anxiety, exacerbated by a lack of recent official U.S. jobs and inflation data due to a prior government shutdown. Traditional markets, more sensitive to long-term economic projections, are pausing. In contrast, the crypto market appears to be reacting to the immediate liquidity implications of the cut itself, viewing the current moment as a short-term catalyst.
Underneath Bitcoin’s Calm Surface, a Complex Picture Emerges
Bitcoin’s price resilience masks a complex derivatives market that reveals lingering investor caution. While Bitcoin’s short-term implied volatility has remained stable, options data shows a continued preference for puts over calls, a classic hedge against downside risk. Furthermore, the rally is notably narrow. The so-called “altcoin season” indicator has hit a record low, with major indexes tracking smaller tokens significantly underperforming market leaders like Bitcoin and Ethereum. This suggests the current move is driven by macro-focused capital flowing into the largest, most liquid crypto assets as a pure policy bet, rather than broad, speculative enthusiasm for the entire sector.
A Looming Risk from the East
Beyond the Fed, another significant macro risk is brewing that could impact global liquidity: surging bond yields in Japan. As the Bank of Japan signals a shift away from its long-held ultra-loose policy, the yield on Japanese government bonds has risen sharply. This threatens to unwind the massive “yen carry trade”, where investors borrowed cheap yen to invest in higher-yielding assets worldwide, including U.S. stocks and cryptocurrencies. If Japanese investors begin repatriating capital to take advantage of better yields at home, it could trigger a withdrawal of liquidity from global risk markets. Experts suggest that sustained high yields in Japan could potentially lead to a 5-8% correction in Bitcoin’s price. This developing situation serves as a stark reminder that the Fed is not the only central bank that matters for crypto markets.
The modest rise in Bitcoin against a backdrop of falling Asian equities highlights a market in a delicate balancing act. Crypto traders are buying the near-certainty of a Fed-driven liquidity boost, while traditional investors are selling on the uncertainty of what comes next. All strategic positioning, however, may be quickly rewritten depending on the precise language from Chair Powell this afternoon and the evolving monetary landscape across the Pacific.
