Bitcoin is fluctuating sideways following the Fed's dovish interest rate cut and ahead of the Bank of Japan's (BoJ) interest rate decision on December 19th, leading the market to prioritize defensive strategies over price breakouts.
Despite US stocks surging after dovish messages from the Fed, Bitcoin fell in a "buy the rumor, sell the fact" fashion and remained below $100,000. Upcoming macroeconomic data could determine whether this is just a shakeout within a Bull market or an extended correction.
- Bitcoin has remained below $100,000 for weeks, despite the Fed shifting its tone toward supporting liquidation.
- The Bank of Japan's December 19th meeting and the MSCI index review in mid-January are two risks that could cause significant volatility.
- Relative Unrealized Loss around 10% is XEM "normal" in a Bull market, but above 20% can signal capitulation.
Macroeconomic developments are currently influencing Bitcoin.
Bitcoin reacted mixedly after the Fed meeting and ahead of the BoJ meeting on December 19th.
Bitcoin has yet to capitalize on the Fed's dovish stance and remains volatile as the market awaits the Bank of Japan's interest rate decision on December 19th, an event that could trigger a short-term wave of risk aversion.
At the time of writing, Bitcoin was trading around $90,200 and had been below $100,000 for the fourth consecutive week. The decline following the Fed news was described as a "buy the rumor, sell the news" pattern, indicating that profit-taking was still present despite improved risk appetite in the stock market.
As macroeconomic milestones approach, traders often closely monitor Derivative market movements to gauge risk "tension." With tools like funding, liquidation, and Open Interest (OI), BingX can help users observe the shift from accumulation to defense, rather than just looking at spot prices.
The analytical perspective leans towards a scenario where liquidation supports crypto.
Coinbase believes that "stealth QE" could support the market until the first quarter of 2026.
Coinbase projects that the Fed's shift from balance sheet shrinking to net injections could create a "mild QE" effect, thereby supporting crypto extending into Q1 2026.
Coinbase analysts have projected that “stealth QE” could “pump” momentum into the crypto market. They also mentioned a $40 billion liquidation injection and a 2026 environment that is “less hawkish than expected.”
"We believe that the Fed's shift from balance sheet shrinking to net injections, XEM 'mild QE' or 'stealth QE,' could support the crypto market."
– Coinbase analysts, quoting a post on X
The technical threshold is being closely monitored by the market.
Swissblock XEM $93,500 as a confirmation point for an upward trend according to its internal modeling.
According to Swissblock, the bullish momentum could be “confirmed” if Bitcoin regains $93,500, based on their proprietary analysis model.
The Swissblock group has confirmed its view that recapturing $93,500 could strengthen the positive signal. However, the market still faces historical risks, so breaking above the technical level may not be enough if macroeconomic volatility increases significantly.
The options market is reflecting the demand for hedging.
The 25RR indicator suggests investors are cautious ahead of deadlines around December 19th.
Options data shows increased hedging activity ahead of December 19th, implying that demand for protection against year-end price declines remains significant.
With the Bank of Japan's decision on December 19th, the 25-Delta Risk Reversal (25RR) was recorded at -3.7 for the December 19th term and 6.4 for the December 26th term. The way the market "prices" near-term maturities is often interpreted as a sign of caution, as the level of hedging through put options may increase towards the end of the year.
The "Yen carry trade unwind" scenario is a macroeconomic risk that cannot be ignored.
The Bank of Japan (BoJ) can indirectly impact Bitcoin through exchange rate fluctuations and Capital flows.
The main concern is that the Bank of Japan (BoJ) could cause volatility in the yen and trigger a contraction in carry trade positions, creating a ripple effect on risky assets like Bitcoin.
The market is sensitive because Japan is one of the major creditors of US government debt, so any change in stance could amplify intermarket volatility. Therefore, December 19th is often XEM as a crucial point to "break through" before expectations of a decisive rebound become more convincing.
The history of Bank of Japan interest rate hikes makes traders wary.
On several previous occasions, Bitcoin has fallen 20%–30% after the Bank of Japan (BoJ) raised interest rates.
If historical patterns repeat themselves, Bitcoin could experience a sharp decline following the BoJ decision, although this is not a definitive prediction.
The context recalled is that previous Bank of Japan interest rate hikes have been accompanied by Bitcoin drops of around 20%–30%. If a similar scenario repeats, one analyst has warned the price could retreat to around $70,000. However, the actual reaction will depend on the accompanying message and the extent to which the market is “pricing up.”
The two "risk clouds" are the Bank of Japan (BoJ) and the MSCI review in mid-January.
The market may remain volatile until these two events pass.
The Bank of Japan (BoJ) and the MSCI review in mid-January are two variables that could skew short-term expectations, causing prices to continue fluctuating instead of breaking out significantly.
Besides the BoJ, the market is also watching the MSCI index review for crypto treasury companies in mid-January, which could involve a XEM of the exclusion of Strategy and similar businesses. If Bitcoin weathers both events without a significant risk shock, the probability of a decisive rebound could increase.
Relative Unrealized Loss is currently the boundary measure between correction and capitulation.
The 20% threshold is XEM a level that could trigger 2022-style capitulation.
According to the cited on-chain data, a Relative Unrealized Loss around 10% is still consistent with a Bull market trend, but exceeding 20% could signal a widespread sell-off.
A senior researcher at Glassnode, CryptoViz Art , stated that Relative Unrealized Loss is currently around 10% of market Capital , a common occurrence in bull trends when Bitcoin is in the $80,000–$90,000 range. However, if risk events trigger a sharp decline and this indicator exceeds 20%, the market could enter a state of capitulation similar to that of 2022.
Conclude
Bitcoin needs to overcome a period of historical risk to establish a new trend.
In the short term, Bitcoin remains constrained below $95,000–$100,000 and is volatile until the BoJ decision and the MSCI review in mid-January are clearly resolved.
- Bitcoin continues to be capped below $95,000 despite the Fed shifting its tone toward support.
- The market is showing caution ahead of Japan's interest rate decision on December 19th.
Frequently Asked Questions
How might the Bank of Japan's interest rate decision on December 19th affect Bitcoin?
The Bank of Japan (BoJ) can indirectly influence the market through yen fluctuations and global Capital flows. If risk markets tighten due to carry trade unwinding, Bitcoin could face downward pressure in the short term, especially given the defensive sentiment that has emerged in the options market.
What does the 25-Delta Risk Reversal (25RR) say about the market sentiment for BTC options?
The 25RR reflects the difference in demand between Call Option . The levels recorded around the December 19th and December 26th expiration dates indicate that traders are focusing on hedging ahead of the BoJ event, implying increased caution towards the end of the year.
What does the $93,500 mark mean according to Swissblock?
Swissblock suggests that the upward momentum could be confirmed if Bitcoin reclaims $93,500 according to their internal model. This level is XEM as a momentum test, but it still needs to be considered within the context of historical risks.
How do a 10% relative unrealized loss differ from a 20% threshold?
A relative unrealized loss of around 10% of market Capital is typically still appropriate in a Bull market at the $80,000–$90,000 range. If the index rises above 20%, the risk of capitulation (sell-off) increases, similar to some periods of sharp declines in the past.
