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With the end of the year approaching, the crypto market is fraught with crises, and a "liquidity squeeze" is unfolding.
The Bank of Japan's monetary policy meeting on December 18-19 will be a critical turning point. The market widely expects a 25 basis point rate hike, pushing the benchmark interest rate to 0.75%—a new high in over thirty years. As the yen appreciates and global liquidity tightens, $BTC is hit hardest: yesterday, amid a more than 8% plunge in MicroStrategy's stock price, Bitcoin briefly fell below the $85,000 support level, triggering a chain of sell-offs.
Let's look at what history says: since Japan began its rate hike cycle in 2024, each policy tightening has been like a precise strike. First ending negative interest rates in March? BTC dropped by 23%. Adding another hike in July? The decline expanded to 26%. By January this year, the rate hike was implemented, and the market experienced a drop of over 30%. This reversal caused by "yen arbitrage" risk aversion has become a nightmare for Bitcoin. If this rate hike occurs as expected, combined with the typically low trading volume at year-end, it will be difficult for Bitcoin to avoid a deeper correction. With a lack of rebound strength, the high of 94,500 now seems distant, and 95,000 is just a pipe dream. If the bears are patient, they might see the 80,000 level give way in January.
$ZEC isn't doing much better. Privacy coins are now hovering around the $400 mark, clearly in a phase of underperformance. Last week, it barely managed a bullish candle, but trading volume was sluggish, and the long upper shadow lengthened, indicating exhausted bulls. The Bank of Japan's "sword of Damocles" hangs overhead, and the probability of reaching new highs this week is almost zero. Placing short orders above $450 is a prudent choice; from a higher-level perspective, a pullback to $300 or even a new low for ZEC is almost certain. Now is the time to stay put and wait for the bears' feast to unfold.
The crypto winter has fully arrived. The liquidity squeeze is accelerating, and this move by the Bank of Japan—could it become the biggest black swan of 2025?
Reminds me of the previous wave of people caught in the Japanese yen arbitrage reverse operation; they're probably still eating dirt now.
Rather than guessing the bottom, it's better to wait for a signal. If 80,000 breaks, then we'll talk.
This round of ZEC really feels hopeless; holding steady and not moving is the way to go.
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It's another reversal of the yen arbitrage, this routine is too familiar, each time smashing the market precisely.
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Wait, is this wave really going to drop to 80,000? I still want to buy the dip.
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ZEC is already like this, privacy coins are completely out of the game, it was time to clear the position.
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Using the term liquidity squeeze sounds suffocating, mid-December is really a tough time.
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Breaking 85k on Bitcoin is just the beginning, there's still more room to fall.
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The bulls are already exhausted, entering now just means giving money to the bears.