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Last week, the US Federal Reserve officially ended its Quantitative Tightening (QT) policy. Coupled with market expectations of an imminent rate cut, both the US stock market and the crypto market rebounded sharply in the latter part of the week, shaking off the early-week downturn. BTC also returned to the $90,000 level, and ETH climbed back to $3,000. On Sunday, the crypto market continued to experience liquidation events: Bitcoin first suddenly plunged to $87,000, then rebounded to $91,000, resulting in a wipeout for both long and short positions. After the liquidations, looking at the short-term (1-day) liquidation map, the market still leans bullish, indicating that investors are optimistic about the outlook due to this week’s rate cut expectations.

There are two events to watch this week: The first is a speech by Bank of Japan Governor Kazuo Ueda on Tuesday afternoon, and the second is the US Federal Reserve’s interest rate decision on Wednesday evening. As mentioned last week, if the Bank of Japan announces a rate hike, it could offset the effects of the Fed’s ending of QT last week, and simultaneously withdraw liquidity from global markets. This would render the popular “carry trade” strategy used by global investors for years ineffective. The resulting impact might be so severe that even a US rate cut wouldn’t cushion the blow, leading to pessimism in the market due to a liquidity crunch and severely impacting the crypto market.