Markets React as Tensions Rise Between White House and Federal Reserve Over Interest Rate Pressure 
Morgan Stanley Raises KOSPI Target to 5,200 on Strong Earnings and Reform Momentum 
Fed Confirms Rate Meeting Schedule Despite Severe Winter Storm in Washington D.C. 
New York Fed President John Williams Signals Rate Hold as Economy Seen Strong in 2026 
RBA Expected to Raise Interest Rates by 25 Basis Points in February, ANZ Forecast Says 
ECB’s Cipollone Backs Digital Euro as Europe Pushes for Payment System Independence 
China Holds Loan Prime Rates Steady in January as Market Expectations Align 
Bank of England Expected to Hold Interest Rates at 3.75% as Inflation Remains Elevated 
Though looser policy usually favors risk assets, expectations for rate cuts from the Bank of Japan can oddly become negative for cryptocurrencies. Usually only after great stress—such as a tightening overshoot, rising JGB yields, bond market turbulence, or growing recession fears—do these hopes surface. Markets see expected reductions in this context as a sign that "things are breaking," which encourages widespread de-risking across assets instead of appreciation of softer conditions.
Often bearing most hardship during such events, crypto is a high-beta and very leveraged asset. Investors decrease risk exposure, hence causing forced deleveraging and liquidations that put cryptocurrency at the front of the sell-off queue. Though easier monetary policy would theoretically have some advantages, early growth or stability issues control any possible gains, therefore severely lowering prices, notwithstanding the attractiveness of the easier monetary policy.
The yen carry trade gives yet another layer of volatility: a JGB sell-off or concerns about debt sustainability can cause severe yen swings and quick unravelling of yen-funded positions. While a macro-recession channel strengthens risk-off behavior, treating crypto more like a cyclical tech asset than a monetary hedge, this produces funding stress that spreads into Bitcoin and Ethereum. Only after the severe stress subsides might the favorable impacts of continuous relaxation eventually support cryptocurrency prices.
