As a veteran who has been active in the crypto space for years, I’ve recently been a bit confused by the series of macroeconomic moves in 2026—while the Federal Reserve is easing liquidity, Japan is stubbornly raising interest rates. The crypto market is dancing between fire and ice.

First, let’s talk about the Fed’s move. The market now generally expects three rate cuts this year, but Citigroup is more aggressive, directly suggesting a 75 basis point cut. Even more astonishing, the Fed plans to restart QE, injecting 40 billion USD per month into short-term government bonds. Combining these two actions, how much blood does that mean for the liquidity market? We all know that crypto relies heavily on liquidity. Remember how crazy the 2020 liquidity-driven bull market was? If more funds come in, can BTC and ETH still stay put?

Then there’s Japan’s move, which is quite surreal. While the rest of the world is cutting rates, Japan is doing the opposite—raising interest rates. Basically, Japan’s inflation has surged to 3%, the yen has plummeted to a 35-year low, and the social costs are becoming unbearable. They have no choice but to hike rates. But this poses a hidden risk for the crypto market—Wall Street previously used zero-interest-rate yen financing to speculate on cryptocurrencies, reaching a scale of 40 trillion yen. Once Japan raises rates, borrowing costs will skyrocket, and forced liquidations could cause a sell-off.

But don’t be too pessimistic. The key is that the market has already priced in these changes psychologically. Moreover, from a probability standpoint, the Fed’s liquidity injection should be enough to offset the negative impact of Japan’s rate hikes. How the crypto market will perform this year ultimately depends on how these two forces contend. As long as the liquidity tap remains open wide enough, funds will naturally flow into truly valuable mainstream assets.