Crypto Market Weekly Review (Nov 17–24): Market Declines Ease as Rising Rate-Cut Expectations Fuel a Potential Recovery

Last week, Bitcoin's price movements were heavily influenced by macro liquidity events, particularly shifting expectations around Federal Reserve rate cuts.

On November 20, the Fed released its October meeting minutes, which reflected a hawkish stance. Shortly after, JPMorgan announced that a December rate cut was unlikely. These news caused market expectations for a December rate cut to plummet to just 22%. Bitcoin responded by dropping as much as 13% over the following two days, reaching a weekly low of $80,600.

However, on November 21, a dovish speech by Federal Reserve official John Williams triggered a dramatic reversal in market expectations for a December rate cut.

Williams serves as President of the New York Fed and is the only regional Fed president with permanent voting rights on the Federal Open Market Committee. He is widely regarded as the Fed's de facto second-in-command. Given his historically hawkish stance, his pivot to dovish messaging caught the market off guard.

According to CME data, the probability of a 25 basis point rate cut in December has risen to 81.1%. Bitcoin and U.S. equity markets have both begun to recover.

The chart below summarizes the influence levels of current Federal Reserve officials and their historical hawkish or dovish stances.

While Powell and Williams hold the strongest influence, recent statements from Fed officials suggest that Cook's vote may become the decisive factor in determining whether the Federal Reserve cuts rates in December.

Upcoming Fed Blackout Period and Macro Liquidity Watchpoints

On November 29, the Federal Reserve will enter its pre-decision blackout period. During this window, which typically lasts about 10 days before FOMC meetings, Fed officials are prohibited from making public comments about monetary policy, meaning markets will lose a key source of forward guidance.

From a macro perspective, attention will continue to focus on indicators such as Japanese government bond yields, private credit default rates, the December 1 end of quantitative tightening, and the pace of Treasury General Account spending.

Japan: Bond Yields, Yen Strength, and Carry Trade Risks

The yield on the 10-year Japanese government bond has risen to 1.78 percent. If this upward trend continues alongside yen appreciation, investors should monitor the potential unwinding of yen carry trades, which could tighten liquidity for U.S. dollar assets.

The narrow measure of yen carry trades, represented by Japanese banks' short-term external debt, stands at approximately $350 billion. Including broader carry trade positions through institutional overseas investments, the total scale exceeds $1 trillion.

U.S. Liquidity Conditions: TGA Balance

Following the end of the government shutdown, the Treasury General Account balance has not shown a significant decline, indicating that the expected fiscal liquidity injection into the market has not yet materialized.

U.S. Equity Market Sentiment

Nvidia reported earnings last Thursday, but despite delivering growth that exceeded expectations, the results failed to stabilize its share price. This reflects rising bearish sentiment toward U.S. equities, as investors grow increasingly concerned about potential downside risks.

Market Sentiment

Over the past seven days, market sentiment has remained in a state of extreme fear. On November 21, after Bitcoin fell to $80,600 and broke down on the weekly chart, the market began to show signs of recovery, with the Fear and Greed Index moving slightly higher. However, sentiment has not yet exited the extreme fear range.

The market has now been in extreme fear for 12 consecutive days, marking the first such period since the FTX exchange collapse in 2022. During that crisis, the market remained in extreme fear from May through July 2022.