Original article | Odaily Odaily( @OdailyChina )
Author｜Golem ( @web3_golem )
On the evening of December 15th, Bitcoin experienced another flash crash, plunging from $89,000 to around $85,000, approaching the low of $83,822 on December 1st. Accompanying the plunge, the market's Fear & Greed Index fell to 21 (extreme fear).
"Be greedy when others are fearful"? The temptation to buy the dips or engage in swing trading is immense right now, but it's extremely easy to make a mistake. Monday's flash crash was not an isolated incident. Three major hidden risks planted in the macro environment in December are severely suppressing Bitcoin's upward potential. A larger downtrend may have only just begun.
Tuesday's non-farm payroll data night
On Tuesday, December 16th at 9:30 PM (UTC+8), the U.S. Department of Labor will release the November non-farm payroll data. Due to the earlier U.S. government shutdown, the October Household Employment Survey data was not collected, resulting in a blank unemployment rate for October. Therefore, the separate October non-farm payroll data has been canceled. However, the U.S. Department of Labor will incorporate the October business survey (non-farm payroll) data into the November release.
While non-farm payrolls data based on business surveys remain useful, the lack of comparison with October household survey data could amplify the discrepancy between non-farm payrolls and the unemployment rate, leading to incomplete market interpretations and potential ambiguity. This merged report, missing some key indicators, could increase speculative trading or volatility in the market, potentially putting downward pressure on Bitcoin prices. Institutions may also treat this report as an "important but caution-inducing" source of information.
Citigroup economists also pointed out that the latest jobs report, to be released on the evening of December 16, may release more conflicting signals. The bank expects a loss of approximately 45,000 jobs in October, but an increase of 80,000 in November. They also predict the unemployment rate will rise from 4.4% to 4.52%, while a Reuters poll of economists shows an unemployment rate of 4.4%. The Federal Reserve's own quarterly forecasts indicate a median unemployment rate of approximately 4.5% by the end of this year.
Furthermore, this is the first non-farm payroll data since the Federal Reserve announced a 25 basis point rate cut on December 10. Due to expectations of a Fed rate cut decision in January 2026, the market may amplify its reaction to wages, industry changes, and total employment figures.
The non-farm payroll report data has the biggest impact on market expectations for a Federal Reserve rate cut in January 2026. According to CME's "FedWatch," the probability of the Fed cutting rates by 25 basis points in January 2026 is only 24.4%, while the probability of keeping rates unchanged is 75.6%.
Morgan Stanley strategist Michael Wilson believes that a mildly weak non-farm payroll report tonight could exacerbate market expectations that the Federal Reserve will cut interest rates again at least in the first quarter of next year.
However, the Financial Times believes that tonight's US non-farm payroll report will provide policymakers and investors with a more complete picture of the US labor market, ending months of partial uncertainty. Although the Federal Reserve lowered interest rates to a three-year low on December 10 amid significant disagreement, the current debate remains focused on whether to prioritize addressing high inflation or a weak job market.
Therefore, given the already negative market conditions, if the non-farm payroll data report fails to provide a positive signal, Bitcoin will face another downward crisis.
The Bank of Japan will announce its interest rate decision on Friday.
The Bank of Japan will announce its interest rate decision on Friday, December 19. The market widely believes that a 25 basis point rate hike (to 0.75%) is a foregone conclusion. According to Polymarket data, the probability of the Bank of Japan raising interest rates by 25 basis points on December 19 has reached 97%, which would bring Japanese interest rates to their highest level in 30 years since 1995.
Investors are closely watching the Bank of Japan's interest rate hikes because yen carry trades have injected massive amounts of capital into global financial markets, including the cryptocurrency market, over the past decade. For more than a decade, the Bank of Japan's interest rates have remained in an ultra-loose range, "close to 0% or slightly negative," allowing numerous institutions and investors to borrow yen at extremely low interest rates and then invest in US Treasury bonds, US stocks, or Bitcoin, passively profiting from interest rate differentials or risk premiums.
However, the Bank of Japan's interest rate hike will shatter all of this. Investors will no longer be able to obtain "free yen" for arbitrage in the global financial market. The stock and currency markets will be under pressure, while the yen will strengthen and the yields on Japanese 10-year and 30-year government bonds will rise one after another.
Some macro analysts believe that if the Bank of Japan raises interest rates as expected on December 19th, Bitcoin may further retrace to the $70,000 level. Analyst AndrewBTC, tracking historical data, points out that since 2024, every rate hike by the Bank of Japan has been accompanied by a Bitcoin price drop of over 20%, such as a drop of approximately 23% in March 2024, approximately 26% in July 2024, and approximately 31% in January 2025. If the Bank of Japan raises rates next week, similar downside risks may reappear.
In fact, the market was overshadowed by the Bank of Japan's interest rate hike throughout December. To some extent, the market had already priced in the possibility of Japan raising interest rates from 0.5% to 0.75% in December. However, the key issue is that the Bank of Japan's December rate hike is not a one-off event, but rather the beginning of a new round of interest rate hikes.
Multiple sources revealed that Japan may raise interest rates further after Friday's hike. These sources stated that Japanese officials believe even at 0.75%, the Bank of Japan has not yet reached its neutral interest rate level. Some officials already consider 1% to be below the neutral rate. Informed sources indicated that even if the Bank of Japan updates its neutral rate estimate based on the latest data, it does not currently expect the range to narrow significantly. The Bank of Japan's current estimate for the nominal neutral interest rate range is approximately 1% to 2.5%.
In this situation, Bitcoin's price is not only under pressure this week, but may also continue to decline in the near future. Crypto investors should prepare themselves mentally.
Increased uncertainty surrounding the nomination of the next Federal Reserve Chairman
Hassett has been a leading candidate to succeed Powell as the next Federal Reserve Chair. Even when the shortlist narrowed to five candidates in early December, Hassett's odds of winning remained far ahead on Polymarket (related reading: Countdown to the Fed's "Change of Leadership": 5 Candidates Revealed, Who Will Be the Ultimate Winner? ). This is because Hassett is a "Trump supporter" and shares Trump's views on the Fed's interest rate cut policy (Trump has consistently advocated for rapid rate cuts).
But things began to turn around on December 13. Trump said in an interview in the Oval Office that day: Both Kevins (Wash and Hassett) are excellent, and the other candidates are also very good.
Meanwhile, according to sources, Trump previously met with Warsh at the White House for 45 minutes, during which he pressured Warsh to guarantee his support for interest rate cuts if elected Federal Reserve Chairman. Trump confirmed this in an interview: "He thinks we have to cut rates, and everyone I've spoken to thinks so." Trump stated that he believes the next Federal Reserve Chairman should consult him when setting interest rate policy.
After the news broke, the probability of Warsh being nominated as the next Federal Reserve Chairman rose to 38% on Polymarket, while Hassett's probability dropped from 75% to 50%.
On December 15th, sources revealed that some high-ranking officials close to Trump were opposing Hassett's nomination as the next Federal Reserve Chair, citing concerns about her close ties to the president. This effectively ended Hassett's advantage on Polymarket; currently, Warsh has a 47% chance of being nominated, while Hassett has a 41% chance, slightly behind Warsh.
This is not good news for crypto investors, who are certainly not interested in the political infighting in the US, but rather in the fact that Warsh is not a proponent of interest rate cuts. Warsh has long been considered a hawk, favoring tighter interest rates and inflation control in his economic policies, and advocating for reducing the central bank's balance sheet. If he takes office, it is clear that he will suppress the development of the crypto market from a macroeconomic perspective.
Bitcoin plummeted on the evening of December 15th, partly due to short-term sentiment influenced by the nomination of Warsh as the next Federal Reserve Chairman. However, if Trump ultimately confirms Warsh's nomination at the end of December, the Christmas rally anticipated by crypto investors may not materialize.
