OTC Weekly Trading Insights (12/05/2025): Fed stop QT, BOJ prepare for rate hike

Overall MarketData source: TradingViewIn our previous report, we identified the key drivers for Bitcoin (BTC) and the broader crypto market in the coming months: the Federal Reserve’s anticipated rate cut and dovish pivot in December, alongside the Bank of Japan’s (BOJ) potential rate hike on December 19. These two central banks played a central role in last week’s market movements. We also highlighted the $93,000 resistance level as a significant barrier, limiting BTC’s upward momentum amid persistent selling pressure above this threshold.On the central bank front, the Federal Reserve’s dovish shift, fueled by speculation around President Trump’s potential Fed Chair nominee in early 2026, signals a move toward looser monetary policy. Kevin Hassett, a former White House economic advisor and Trump loyalist, is emerging as a frontrunner. Markets expect Hassett to adopt a dovish stance, possibly delivering two rate cuts to bring the federal funds rate down to 3-3.25% by year-end, though this remains speculative. Softening labor market data, such as the recent ADP report showing a loss of 32,000 jobs in November, along with slowing consumer demand, further support the Fed’s inclination toward easing.In contrast, the Bank of Japan is moving closer to a rate hike, driven by persistent inflation, including Tokyo’s core CPI rising 2.8% year-over-year in November. This move could attract capital back to Japan, tightening global liquidity. Higher rates would also increase carry trade costs, potentially triggering another round of unwind. Our desk views the market impact as likely more muted than January 2025’s hike to 0.50%, given that expectations have been building for months. Nevertheless, the ongoing liquidity squeeze remains a headwind for risk assets, especially liquidity-sensitive ones like BTC and crypto assets.From a macroeconomic perspective, we expect heightened volatility during the holiday season, amplified by the Fed’s rate decision on December 10 and the BOJ’s on December 19. Analysts currently price in an 80-90% probability of a 25-basis-point Fed rate cut, likely accompanied by a hawkish statement from Chair Powell to temper expectations. For the BOJ, there is a 76-80% chance of a 25-basis-point hike, reflected in the Japan 10-year government bond yield rising to 1.94%, its highest level since the 2008 Global Financial Crisis.Our analysis confirms that the $93,000 resistance level for BTC remains firm, constraining further gains as selling pressure intensifies above it. A decisive break above $93,000, followed by a successful retest as support, would shift our outlook to bullish, potentially opening the path toward $98,000–$100,000.That said, with thinning liquidity over the holidays and major central bank decisions approaching, we anticipate volatile price action amid reduced trading volumes. This environment could lead to rapid momentum shifts. Looking ahead, the positive global liquidity outlook for 2026 underpins our bullish stance, with expectations for a meaningful BTC and crypto rally in the first quarter.Bitcoin ETF TrackerThe above table shows the daily BTC spot ETF net inflow data for the past five trading sessions.Last week, the US market experienced a strong capital inflow through ETFs following the largest outflow week. The Bitcoin ETF sector saw $123 million in inflows over the last four trading days, as the market being closed last Thursday for Thanksgiving.BTC price reached the $93,000 level on Friday, driven by strong ETF demand, but the gains were erased on Monday, December 1, amid rising expectations of a Bank of Japan rate hike. Despite the bearish sentiment, BTC ETFs still recorded an $8.48 million inflow on Monday, indicating that investors view this price as a buying opportunity. BTC surged on Tuesday, supported by a dovish outlook on the Federal Reserve’s stance in 2026, alongside a $58.50 million capital inflow into BTC ETFs.Based on last week’s data, our desk believes US ETF investors are closely following BTC price movements and are actively buying on dips.Macro at a glanceWeekly Macro Highlights (November 27-December 3, 2025)Friday, November 28, 2025Tokyo Core CPI rose 2.8% year-over-year in November, steady from October and slightly above the 2.7% consensus. This persistent inflation above the Bank of Japan’s 2% target strengthens expectations for a potential rate hike soon, signaling a hawkish shift that could tighten global liquidity. Higher Japanese rates may also boost the yen and pressure carry trades, creating headwinds for risk assets.Monday, December 2, 2025The S&P Global US Manufacturing PMI for November came in at 52.2, beating the expected 51.9 and marking the fourth straight month of expansion. In contrast, the ISM US Manufacturing PMI fell to 48.2, below the forecasted 49.0, indicating a slight acceleration in contraction.This divergence highlights mixed signals in US manufacturing: pockets of resilience per S&P Global, but broader weakness driven by soft new orders and employment per ISM. High interest rates and slowing global demand continue to challenge the sector, potentially weighing on overall economic growth.Tuesday, December 3, 2025Eurozone headline CPI inflation accelerated to 2.2% year-over-year in November, up from 2.1% in October and slightly above expectations. Core CPI remained steady at 2.4%.The unemployment rate held at 6.4% in October, unchanged from September but above forecasts and last year’s level.Rising services prices keep inflation near the ECB’s 2% target, signaling persistent pressures that may limit aggressive rate cuts. Meanwhile, the stable yet elevated unemployment rate points to a softening labor market, raising concerns about economic stagnation and supporting the case for further ECB easing to stimulate demand.Wednesday, December 4, 2025US ADP Nonfarm Employment unexpectedly declined by 32,000 private-sector jobs in November, contrasting with forecasts for a 5,000 gain. October’s figure was revised up to +47,000.This is the third job loss in four months and the largest drop since early pandemic disruptions, reflecting labor market weakness amid high borrowing costs and economic uncertainty. The weak report fueled market expectations for Federal Reserve rate cuts in December, boosting stocks and risk assets as investors anticipate looser policy to counter slowing employment.Why trade OTC?  Binance offers our clients various ways to access OTC trading, including chat communication channels and the Binance OTC platform (https://www.binance.com/en/otc) for manual price quotations and execution services. Email: [email protected] for more information.Join our Telegram Channel @BinanceOTCTrading (https://t.me/+0mkJQnbQiOdlZjk0) to stay up to date with the markets!You can also reach out to us on Telegram (@Binance_OTC_Desk) to connect directly with our experienced traders for your OTC trading needs. 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