Bitcoin Wipes Out All Fed Gains As Traders Brace For BOJ Liquidity Shock
Bitcoin ended the week lower after erasing all the momentum it picked up from the Federal Reserve’s rate cut, with traders turning their attention to the Bank of Japan’s upcoming policy meeting, a macro event that historically coincides with sharp pullbacks in the crypto market.
What Happened
BTC opened the week above $90,000 and briefly surged past $94,000 following the Fed’s 25-basis-point cut on December 9, reviving hopes for a push toward the long-watched $100,000 threshold.
But the rebound faded quickly.
Within two days the price had dropped below $90,000, and another short-lived rally toward $93,000 on December 12 met the same fate.
By December 14, Bitcoin was trading just under $89,000, leaving the asset in negative territory for the week.
Why It Matters
Analysts attribute the reversal to growing caution around the BOJ’s December 19 rate decision.
Japan’s central bank plays an outsized role in global liquidity because of its longstanding policy of ultra-low borrowing costs and its status as a major foreign holder of U.S. Treasury.
Any move toward higher rates risks triggering an unwind of the yen carry trade, a strategy underpinning flows into higher-yielding assets worldwide.
A reversal of that trade would effectively reduce dollar liquidity and prompt investors to cut risk across multiple markets, including crypto.
The broader digital asset market mirrored Bitcoin’s retracement.
Total crypto market capitalization fell to about $3.12 trillion on December 14, returning to levels seen a week earlier.
Most major tokens also gave back early-week gains, with several ending slightly lower.
XRP slid more than 3% on the week, dropping below $2 and losing its fourth-place market ranking to BNB.
TRX, DOGE, and ADA also recorded weekly declines of 3% to 6%.
A handful of privacy-focused assets moved against the trend.
Monero (XMR) rose nearly 10%, while Zcash (ZEC) jumped more than 20%, making them two of the strongest performers in an otherwise muted market.
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