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From quantitative tightening to quantitative crypto: How policy shifts are rewriting market rules

From quantitative tightening to quantitative crypto: How policy shifts are rewriting market rules

The Federal Reserve’s less hawkish stance is acting as a catalyst for renewed investor confidence across both traditional and digital asset classes. This shift is occurring as part of a broader recalibration of macro expectations, liquidity dynamics, and institutional posture toward risk.

For those engaged in the evolution of financial systems, particularly at the intersection of decentralised infrastructure and macro policy, the current moment offers insight into how legacy market frameworks are beginning to accommodate the emerging crypto native paradigm, albeit cautiously.

The Fed’s latest policy update, which shows a more dovish tilt relative to earlier guidance, has brought a degree of optimism to markets already sensitive to changes in interest rate trajectories. The decision to implement a 25 basis point rate cut, along with a pause in quantitative tightening, signals that central authorities believe inflationary pressures may be easing enough to allow a recalibration of monetary policy.

This shift coincides with an increase in US initial jobless claims, which rose by 44,000 to 236,000 in the week ending December 6, 2025, exceeding forecasts. Such labour market softness strengthens the case for a more accommodative stance from the Fed, consistent with UOB’s projection of two rate reductions in the second and third quarters of 2026, bringing the Fed Funds Target Rate to 3.25 per cent by the end of 2026.

Equity markets showed a mixed reaction, reflecting relief over the Fed’s stance and caution regarding ongoing macro uncertainties. The Dow Jones rose 1.34 per cent, the S&P 500 gained 0.21 per cent, and the tech-heavy Nasdaq declined 0.26 per cent. This divergence suggests a rotation away from growth-oriented equities toward value and cyclical exposures. A similar dynamic is visible in crypto markets, where Bitcoin’s dominance has increased to 58.75 per cent.

Investors appear to be favouring established, large-cap digital assets as relatively safer options within a volatile risk landscape. This preference for perceived stability aligns with broader portfolio strategies that emphasise quality US equities while leaning toward non-US value and mid-cap exposures.

Fixed income markets also responded positively to the Fed’s policy shift, with US Treasury yields declining. The ten-year yield fell more than 1 basis point to 4.14 per cent, and the two-year yield dropped more than 3 basis points to 3.52 per cent. These movements indicate growing investor appetite for longer duration assets as yield differentials narrow and the path of future rate cuts becomes clearer. Bond yields are becoming attractive again from a strategic perspective, supporting allocations to high-quality fixed income as a counterbalance to equity and crypto volatility.

In foreign exchange markets, the US dollar weakened, with USD/JPY falling 0.3 per cent to 155.48 in its second consecutive session of decline. This weakness is consistent with expectations of further Japanese yen strength as the Bank of Japan signals plans to raise rates in December, narrowing the yield gap with the US.

In commodities, divergent trends emerged. Brent crude fell 1.49 per cent to close at US$61.28 per barrel as market attention shifted to potential progress in Russia-Ukraine peace discussions. Gold rose 1.2 per cent to US$2,880.08 per ounce, reinforcing its role as a defensive hedge in uncertain macro environments.

In Asia, regional equities mostly closed lower following the Fed’s rate cut announcement, though early trading showed mixed performance. The strategic outlook remains overweight on Chinese equities, using a barbell approach that combines exposure to tech innovators and high dividend plays.

Against this macro backdrop, the crypto market rose 2.28 per cent in the last 24 hours, maintaining a seven-day uptrend of 0.3 per cent, though still 9 per cent below its 30-day average. This rebound appears driven not by retail speculation but by institutional momentum and favourable liquidity conditions.

Binance continues to lead global Bitcoin trading volume with a 35.4 per cent share, reflecting its established infrastructure and role as a liquidity hub. More notably, JPMorgan’s execution of a debt deal on Solana during Breakpoint 2025 marks an important moment in institutional adoption of blockchain infrastructure beyond asset speculation. This suggests Solana can support more complex financial instruments, strengthening its credibility among traditional finance participants.

US Bitcoin ETFs recorded US$223 million in inflows, the highest in 20 days, indicating renewed institutional demand for regulated crypto exposure. These flows act as a gauge of professional investor sentiment and show that macro tailwinds are influencing capital allocation decisions. Bitcoin’s price action, however, remains closely tied to equity movements, with a 0.85 correlation to the S&P 500. This dependence highlights a vulnerability: despite gaining institutional legitimacy, crypto has not yet separated itself from traditional risk-on and risk-off dynamics. The recent drop in Bitcoin to US$109,000 during a tech sector selloff illustrates this.

Another factor is the sharp rise in derivatives leverage. Perpetual futures open interest increased 11.6 per cent to US$87.9 billion, while funding rates rose 102 per cent within 24 hours. Bitcoin liquidations reached US$95 million, with 77 per cent coming from short positions, indicating strong bullish momentum but also heightened risk of a leveraged long squeeze. The seven-day RSI of 53 suggests scope for further upside if momentum persists and macro conditions remain supportive.

In conclusion, the current rally reflects a combination of institutional engagement and macro liquidity. However, it continues to unfold within a structure still linked to traditional markets. The Fed’s shift provides short-term support, but sustainability depends on whether crypto can develop independent price drivers rooted in utility, adoption, and network effects.

Key levels to watch include Bitcoin’s US$93,000 resistance and the ETH/BTC ratio, which could indicate altcoin rotation. Solana’s ability to maintain institutional interest after Breakpoint will also be important. While conditions have improved, the market’s structural dependencies and elevated leverage call for cautious optimism rather than strong enthusiasm.

 

Source: https://e27.co/from-quantitative-tightening-to-quantitative-crypto-how-policy-shifts-are-rewriting-market-rules-20251212/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j

From Tokyo to crypto: How political shifts and policy bets are reshaping global markets

From Tokyo to crypto: How political shifts and policy bets are reshaping global markets

The recent victory of Sanae Takaichi in the Liberal Democratic Party leadership race marks a pivotal moment for Japan, positioning her to step into the role of the country’s first female prime minister by mid-October. Investors caught off guard by this outcome quickly adjusted their positions, leading to notable shifts across Japanese markets. The yen weakened significantly, closing above 150 against the US dollar, while Japanese government bonds faced pressure and equities surged in response.

Takaichi’s strong advocacy for expansive fiscal and monetary policies fuelled this immediate reaction, as markets anticipated a push toward reflationary measures. Her focus on sectors such as defence, nuclear energy, and consumer support promises to drive targeted investments, potentially invigorating economic growth in areas that have long been overdue for attention.

From my perspective, this development injects a fresh dynamism into Japan’s economy, which has grappled with stagnation for years. A leader willing to embrace bold stimulus could finally break the cycle of timid reforms, though the path ahead carries risks that demand careful navigation.

Markets reacted swiftly to Takaichi’s win, reflecting a broader repricing that favoured equities over safer assets. The Nikkei 225 climbed 1.9 per cent on Friday, reaching an all-time high amid a rally in tech and semiconductor shares across Asia. Investors now expect further upside in Japanese stocks, particularly in sectors aligned with Takaichi’s priorities.

Defence and nuclear stocks stand out as prime beneficiaries, given her strategic emphasis on bolstering national security and energy independence. Infrastructure plays and domestic demand-oriented companies also look poised for gains, as her policies aim to stimulate household spending and support small caps.

Exporters benefit from the yen’s depreciation, which enhances their competitiveness abroad. Banks, however, faced initial selling pressure, as expectations for a Bank of Japan rate hike in the fourth quarter diminished under the assumption of Takaichi’s influence.

Yet, this dip presents an opportunity, in my view, because her reflationary approach could boost loan growth, and the central bank might still raise rates to manage volatility in the yen and bond markets. Overall, this sector rotation highlights a market that is betting on policy-driven growth, where winners emerge from areas tied to fiscal expansion.

Macro risks loom large in this scenario, tempering the enthusiasm. The yen’s weakness raises concerns about imported inflation and currency stability, particularly given Japan’s debt-to-GDP ratio, which exceeds 260 per cent. Such high leverage amplifies worries over fiscal sustainability if expansive policies lead to overshooting.

The Bank of Japan may be compelled to hike front-end rates, although many now anticipate a delay into 2026 amid persistent inflation and negative real yields. Policy uncertainty adds another layer, as Takaichi’s administration must balance bold promises with execution.

Investors should monitor how her government addresses these challenges, as any misstep could erode confidence. In my opinion, while the immediate rally feels justified, the long-term success hinges on disciplined implementation. Japan has seen reformist leaders falter before, so Takaichi’s ability to deliver tangible results will determine whether this surge sustains or fizzles.

Shifting to the investment thesis, the stimulus-led upside appears compelling for Japanese equities in the near term, particularly in sectors aligned with Takaichi’s agenda. A risk-adjusted strategy favours reflation beneficiaries, with appropriate hedges to mitigate volatility. The market places its bets on her delivering bold policy changes, but execution risk remains a critical factor. Fiscal discipline will prove essential to avoid exacerbating debt issues.

From where I stand, this moment offers a buying opportunity for those optimistic about Japan’s potential under new leadership. The rally could extend if Takaichi assembles a cohesive cabinet and pushes through her agenda swiftly, drawing in foreign capital seeking exposure to Asia’s third-largest economy.

On the global front, risk sentiment stayed muted due to the ongoing US government shutdown, as the Senate repeatedly failed to pass a funding bill with lawmakers sticking to their stances. This impasse delayed key data releases, including September’s non-farm payrolls, which investors awaited on Friday but never received.

In contrast, Sanae Takaichi’s LDP win captured headlines, highlighting a stark difference in political momentum between the two nations. Wall Street closed mixed on Friday, with the Dow Jones up 0.51 per cent, the S&P 500 edging higher by 0.01 per cent, and the Nasdaq dipping 0.28 per cent as the tech rally paused. US Treasury yields climbed despite services data falling short of expectations, with the 10-year yield rising 3.7 basis points to 4.119 per cent and the two-year yield also up 3.7 basis points to 3.576 per cent.

The US dollar index slipped 0.1 per cent to 97.72, while gold advanced 0.8 per cent to 3886 dollars per ounce. Brent crude gained 0.7 per cent to 64.53 dollars per barrel, buoyed by President Trump’s warnings to Hamas regarding his plan to end the Gaza war. Asian equities ended higher on Friday, driven by tech and semiconductor stocks, although early trading on Monday showed mixed results. US equity futures indicate a higher open, suggesting some resilience amid uncertainty.

Looking ahead, the week features speeches from Federal Reserve officials, including Governor Stephen Miran on Wednesday and Chair Jerome Powell on Thursday. Delays in US data persist, affecting August trade figures, initial jobless claims, and the September federal budget balance.

These events could shape market expectations, particularly around monetary policy. The US shutdown exacerbates economic fog, pushing investors toward safe havens like gold while pressuring equities. Yet the interplay with Japan’s developments creates intriguing cross-currents, where Asian stimulus might offset some Western headwinds.

Turning to the crypto market, it rose 1.04 per cent over the last 24 hours, building on its 7-day gain of 9.07 per cent and 30-day advance of 10.76 per cent. Several factors drove this momentum, starting with macro tailwinds from the US shutdown and weak jobs data, which heightened bets on Federal Reserve rate cuts.

Bitcoin surged 12 per cent last week following the shutdown and ADP jobs report showing a drop of 32K against expectations of plus 50K. Markets now see a 98 per cent chance of a cut by October 29, according to TokenPost. Gold’s 48 per cent year-to-date rise mirrored crypto’s rally as a hedge against uncertainty.

The high correlation between crypto and equities, at 0.82 over seven days versus the Nasdaq-100, amplified these gains as traders shifted into risk assets. Investors should watch Powell’s October 29 speech and FOMC minutes for insights into the rate path. This environment favors crypto as a speculative play, where dovish signals could propel further upside.

Binance’s ecosystem provided another bullish pillar, with the exchange achieving 2.55 trillion dollars in monthly futures volume, a 2025 high, and capturing 87 per cent of Bitcoin taker buy volume per CMC. Its new AI-powered Trading Signals feature boosted activity in the BNB ecosystem, lifting BNB by 18.42 per cent weekly.

Binance’s liquidity depth, holding 41.1 per cent global market share, and institutional tools draw in capital, fostering network effects for its token and partners. This dominance reinforces confidence, making Binance a linchpin in the market’s resilience. I see this as a sign of maturing infrastructure in crypto, where platforms like Binance evolve from mere exchanges to comprehensive ecosystems, attracting serious investors amid broader volatility.

Altcoin developments added a mixed but largely positive influence. Ethereum climbed 9.96 per cent weekly, approaching 4500 dollars ahead of December’s Fusaka upgrade. Solana’s Alpenglow upgrade, reducing block finality by 40 per cent, spurred 13 per cent weekly gains.

However, Bitcoin dominance increased to 58.55 per cent as traders secured profits from alts. These upgrades sustain narratives around altcoins, though Bitcoin’s seven-day RSI of 87.4 indicates overbought territory. The key question revolves around Ethereum’s post-Fusaka momentum, especially as staking yields compress. From my standpoint, altcoins offer diversification in a bull run, but their reliance on upgrades highlights the sector’s innovation-driven nature, which can yield outsized returns when executed well.

In conclusion, today’s market dynamics blend opportunity with caution. Japan’s shift under Takaichi promises stimulus-fuelled growth, potentially lifting equities and sectors like defence and nuclear, while the yen’s weakness and debt concerns warrant vigilance.

Globally, the US shutdown clouds data and sentiment, yet it bolsters rate-cut expectations that benefit risk assets, including crypto. The crypto surge, driven by macro bets, Binance’s strength, and altcoin catalysts, reflects a Goldilocks scenario for bulls. Nonetheless, resistance at Bitcoin’s 125K level and potential Fed hawkishness could prompt pullbacks.

I believe the overarching trend leans positive for investors willing to embrace calculated risks, as political and economic shifts create fertile ground for gains. Takaichi’s leadership could herald a new era for Japan, complementing crypto’s resilience in uncertain times, but success depends on policy delivery and central bank responses. This interconnected landscape demands agility, where staying informed on speeches and upgrades will separate winners from the rest.

 

Source: https://e27.co/from-tokyo-to-crypto-how-political-shifts-and-policy-bets-are-reshaping-global-markets-20251006/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j

Market dynamics: Equity gains, yield shifts, dollar strength, commodity dips, and crypto highs

Market dynamics: Equity gains, yield shifts, dollar strength, commodity dips, and crypto highs

The overriding theme in today’s markets is a subdued global risk sentiment, driven largely by President Trump’s aggressive tariff threats. He’s put the world on notice, warning of 100 per cent “secondary” tariffs on any country that continues to do business with Russia unless there’s a ceasefire in Ukraine within 50 days.

This bold move is a clear escalation in the US’s strategy to pressure Russia into de-escalating its ongoing conflict, but it’s also a high-stakes gamble that could backfire by targeting nations that trade with Russia, potentially including major players like China, India, or even some European countries.

Trump is risking a disruption of global supply chains and a wave of retaliatory measures. The European Union isn’t sitting idly by; it’s already gearing up to deepen ties with other affected nations, such as Canada and Japan, to forge a coordinated response. This could mean joint diplomatic efforts or even counter-tariffs, adding yet another layer of complexity to an already tense situation.

From my vantage point, this feels like a geopolitical chess game where every move could either stabilise or destabilise the global economy further. The 50-day deadline adds urgency, and I suspect markets will remain jittery as we approach that critical juncture.

Despite this uncertainty, US equities have managed a modest rebound, which tells me investors are trying to find a silver lining amid the storm clouds. The S&P 500 eked out a 0.1 per cent gain, the NASDAQ climbed 0.3 per cent, and the Dow Jones rose 0.2 per cent. These aren’t blockbuster numbers by any stretch, but they suggest a cautious optimism or perhaps a calculated bet that the tariff threats won’t fully materialise.

I think part of this resilience stems from faith in the Federal Reserve’s ability to navigate inflationary pressures or hope that diplomatic backchannels might soften the blow. However, the muted gains also hint at lingering unease. Investors are clearly hedging their bets, and I wouldn’t be surprised if we see sharper swings in the coming weeks as more details emerge about the tariff plans and international reactions.

Switching gears to the bond markets, US treasuries took a hit, with yields ticking higher in a way that’s caught my attention. The 10-year yield rose 2.4 basis points to 4.433 per cent, while the two-year yield edged up 1.5 basis points to 3.900 per cent.

This uptick was partly influenced by a curve-steepening selloff in Japanese government bonds, which seems to have set a ripple effect across global sovereign debt markets. With no major US economic data releases to anchor sentiment, external factors like Japan’s bond dynamics are taking the lead.

A steepening yield curve typically signals expectations of stronger growth or rising inflation, but in this context, I see it more as a reflection of investor nerves about the tariff fallout. Higher yields could make borrowing more expensive and weigh on growth if the trend continues, something I’ll be watching closely as the situation unfolds.

Then there’s the US Dollar Index, which is on a tear with an eight-day winning streak—the longest since February, adding a 0.2 per cent gain to its run. At first glance, this strength makes perfect sense: the dollar often shines as a safe haven when geopolitical risks flare up, and Trump’s tariff saber-rattling fits that bill.

But I think there’s more to it. The US economy still looks relatively robust compared to its peers, and the prospect of higher interest rates here versus, say, Europe or Japan is keeping the greenback in demand.

From my perspective, this dollar rally could amplify the tariff impact by making US exports pricier and imports cheaper, potentially widening trade imbalances. It’s a double-edged sword that could either bolster US leverage or stoke further tensions with trading partners.

Commodities, meanwhile, are painting a mixed picture that’s worth digging into. Gold, the classic refuge in times of trouble, slipped 0.4 per cent to US$334 per ounce, which surprised me given the geopolitical backdrop. I suspect profit-taking is at play here, investors cashing in after a strong run rather than abandoning the safe-haven narrative altogether.

Brent crude, on the other hand, dropped 1.6 per cent to US$69 per barrel, and that feels more tied to fundamentals. If tariffs spark a trade war or slow global growth, demand for oil could soften, and that’s likely what’s spooking the energy markets.

I’d wager we’re also seeing some speculative unwinding after recent volatility. Both moves underscore how sensitive commodities are to shifts in risk sentiment, and I’ll be keeping an eye on whether these declines deepen or reverse as tariff news evolves.

All of this brings us to two pivotal events on the horizon: today’s US inflation data and the start of major bank earnings reports. The inflation numbers are the big ones, everyone’s eager to see if Trump’s tariff threats are already pushing up final goods prices. If we get a hot reading, say above the expected 2.6 per cent year-over-year for the Consumer Price Index, it could jolt the Fed into a more hawkish stance, maybe even accelerating rate hikes.

That’d be a game-changer for equities, bonds, and the dollar. On the flip side, a tame report might ease some nerves and buy time for diplomatic solutions. As for the bank earnings, from giants like JP Morgan and Goldman Sachs, I’ll be scouring their outlooks for clues about how they’re bracing for tariff risks or higher rates.

Any whiff of caution could drag sentiment lower, while upbeat forecasts might fuel a rally. My gut tells me these reports will be a mixed bag, reflecting the uncertainty we’re all grappling with.

Now, let’s talk about the wild card in this whole saga: cryptocurrencies. Bitcoin just smashed through US$120,000, peaking at US$122,404 with a 2.8 per cent daily gain and a 10 per cent surge over the past week. This rally, turbocharged since Trump’s election win, is riding a wave of excitement about new US legislation that could cement America’s status as the “crypto capital.”

Lawmakers in the Republican-led House are set to debate three bills this week: the Genius Act, the Digital Asset Market Clarity Act, and the Anti-CBDC Surveillance State Act. These could streamline regulations, clarify stablecoin rules, and push digital assets deeper into mainstream finance. Ether hit US$3,081.94, its highest since February, and XRP jumped 2.7 per cent, lifting the crypto market’s total value to US$3.8 trillion, per CoinMarketCap data.

I see this as a fascinating counterpoint to the tariff gloom, a sign that some investors are betting big on a parallel financial system less tethered to traditional risks. If these bills pass, we could see crypto’s momentum accelerate, though I’m wary of a pullback if regulatory hopes fizzle.

My take on all this is that the tariff headlines are casting a long shadow, muting global risk appetite and forcing markets into a defensive crouch. There’s resilience too: US stocks are holding up, the dollar’s flexing its muscles, and crypto’s soaring on its own trajectory.

I think the next few weeks will be defining. If the tariff threats escalate into action and inflation spikes, we could see a sharper risk-off move, think falling equities, surging yields, and a choppier dollar. But if cooler heads prevail, or if the Fed signals steady support, markets might muddle through with minimal damage.

The crypto boom adds an intriguing twist; it’s almost like a barometer of faith in innovation amid chaos. For now, I’d advise investors to stay nimble, watch the data, and brace for volatility because in this environment, the only certainty is uncertainty itself.

 

Source: https://e27.co/market-dynamics-equity-gains-yield-shifts-dollar-strength-commodity-dips-and-crypto-highs-20250715/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j