Will Bitcoin Suffer A 20% Decline After Japan’s Rate Hike? Historical Patterns Suggest So

Markets are in the last full trading week of 2025, and with Christmas Holidays approaching, Wall Street’s sector rotation is sending signals that crypto traders cannot ignore.

Capital is moving away from crowded Big Tech and AI trades into financials, industrials, and materials, reshaping liquidity conditions that often spill into Bitcoin, Ethereum, and altcoins. For investors looking to position themselves ahead of 2026, these flows could offer critical clues about where risk appetite and liquidity may be headed.

Wall Street Sector Rotation Signals Potential Catalyst for Crypto Markets in 2026

Recent market data highlights the shift, with materials surging 4% last week, financials gaining 3%, and industrials climbing 1.5%. Meanwhile, communication services and technology are lagging.

Deutsche Bank noted tech’s first back-to-back weekly outflows since June, signaling fading AI euphoria.

In an interview with CNBC, Chris Toomey of Morgan Stanley Private Wealth Management described this rotation as “meaningful.” He cited broadening opportunities outside the MAG-7 and tech-adjacent names as key drivers heading into 2026.

Why Crypto Traders Should Care

Historically, sector rotation in equities correlates with increased liquidity seeking alternative assets, often benefiting Bitcoin as a proxy for risk appetite.

The current “run-it-hot” macro narrative, driven by lower interest rates, stronger growth expectations, and seasonal liquidity around tax season, creates conditions favorable to crypto, even amid volatility in traditional markets.

Year-to-date, crypto underperformed relative to equities. Bitcoin has declined by roughly 8%, Ethereum by 12%, and Solana by 33%. Meanwhile, the S&P 500 and Nasdaq gained 15% and 18%, respectively.

Despite this lag, analysts see potential for a sharp rebound in early 2026 as macro tailwinds align and investors reposition for the new year.

Five key drivers could support a Q1 2026 crypto rally:

• End of Fed quantitative tightening: Reversing QT would restore liquidity, historically a catalyst for Bitcoin rallies.
• Anticipated interest rate cuts: US rates may fall to 3–3.25%, improving conditions for growth and alternative assets.
• Short-term liquidity injections: Treasury bill purchases and technical buying could bolster funding markets.
• Political incentives for stability: Midterm elections incentivize policymakers to maintain supportive market conditions.
• Labor market dynamics: Signs of job market slack could allow the Fed to remain dovish, sustaining liquidity flows.

The rotation is also changing the equity market’s risk profile. Investors are favoring lower-beta sectors such as healthcare, financials, and consumer discretionary, while high-beta tech momentum trades cool.

Equity Moves Offer Clues for 2026 Crypto Volatility

Tesla’s recent move on autonomous robotaxi tests exemplifies short-term market swings that are captured in sector indexes but often spill into crypto via correlated risk flows.

According to Toomey, the broader takeaway is that trading decisions dominate short-term markets as year-end approaches. This creates range-bound conditions and increased volatility in crypto.

Investors who track equity flows may gain an edge, especially as Wall Street reallocates for 2026 and crypto markets preemptively respond.

Crypto analyst Alana Levin introduced a framework for crypto growth, using three compounding S-curves: asset creation, asset accumulation, and asset utilization.

This approach spans all macro conditions, stablecoins, exchanges, on-chain activity, and frontier markets, key factors for crypto adoption and price action as sector rotation continues through 2026.

For Bitcoin and altcoins, the last weeks of 2025 are not just a quiet holiday window. It is a critical preview of how liquidity, macro sentiment, and investor positioning could set the stage for a potentially historic start to 2026.

A combination of macro tailwinds and strategic rotations may drive significant upside across digital assets.

Ripple, a blockchain-based infrastructure for global payments, has taken a major step to expand the use of its US dollar-backed stablecoin, RLUSD. On December 15, the company confirmed it is testing RLUSD on several Ethereum layer-2 networks, including Optimism, Base, Ink, and Unichain. 

This move builds on its earlier launch and aims to create a more connected system while increasing real-world use for XRP.

Ripple RLUSD Stablecoin Goes Multichain

According to recent updates shared by the Ripple community, Ripple’s RLUSD stablecoin, which already has a market value of about $1.3 billion, has adopted Wormhole’s NTT standard. 

This upgrade allows RLUSD to move between blockchains as the original token, not as risky wrapped copies.

By using Wormhole’s Native Token Transfers system, RLUSD can shift smoothly across networks while staying secure and liquid. This setup also lets Ripple keep full control over how RLUSD operates on each supported blockchain.

How XRP Fits Into This Bigger Plan

While RLUSD acts as the “digital cash” in Ripple’s system, XRP plays the role of the liquidity engine. At the same time as RLUSD expands, partners like Hex Trust are rolling out wrapped XRP (wXRP). 

This allows XRP to be used on networks like Solana and Ethereum, where it can serve as collateral, trading liquidity, or DeFi fuel.

JPMorgan Asset Management has introduced a tokenized money-market fund built on the Ethereum blockchain, according to company filings and industry reports.

The fund, called My OnChain Net Yield Fund (MONY), issues shares as digital tokens that live on the public Ethereum network and are aimed at qualified investors through the bank’s Morgan Money platform.

JPMorgan Issues Tokenized Fund On Ethereum

Based on reports, MONY holds familiar, low-risk instruments such as US Treasury securities and repurchase agreements fully backed by Treasuries.

The bank says the token shares represent direct ownership of the fund and can be held at blockchain addresses, opening up on-chain settlement and recordkeeping for a product that normally sits in traditional custody systems.

Seeded With $100 Million

Reports have disclosed that JPMorgan seeded MONY with $100 million of its own capital at launch. The move is meant to kickstart liquidity and show institutional seriousness about putting cash management products on-chain.

The tokenization work is being handled by internal teams tied to JPMorgan’s digital-assets efforts, and the bank has been testing ways to move conventional securities into token form for several years. How The Tokens Work And Who Can Use Them

Investors receive tokenized fund shares that may be transferred or recorded on Ethereum. Based on reports, access is limited: the fund is offered only to qualified clients via Morgan Money, not to the general retail public.

The token structure mirrors traditional fund economics — holders are exposed to the same short-term instruments that underpin money-market products — but the record of ownership is stored on a public ledger.Qualified Investors And Access

According to coverage, institutional clients with asset levels above $25 million and accredited individuals with at least $5 million are among those eligible, and the minimum initial investment sits at roughly $1 million.

That narrow access aligns with regulatory guardrails for tokenized securities and with the bank’s goal of serving big, sophisticated cash managers first.

Analysts say the launch is part of a broader push by big asset managers to experiment with tokenized share classes and on-chain settlement.

Other firms have run pilots with similar ideas, and some have already put cash-like products on Ethereum. Based on reports, the move points to an industry desire to test whether blockchain can speed up settlement, increase transparency, or create new on-chain liquidity for institutional cash flows.

Featured image from Unsplash, chart from TradingView

Famous stock picker Jim Cramer recently took to the X social media network to opine that the price of Bitcoin is actually easy to prop up. 

He has seemingly suggested that it is being artificially inflated by manipulation, large holders, or specific entities (like Michael Saylor’s Strategy).

However, this comes after Strategy injected nearly $1 billion ($980.3 million) of pure buying pressure into the market between Dec. 8 and Dec. 14.

Despite this massive influx of cash, the price fell. They bought at an average of $92,124, but the price has since plunged to $85,000.

So, the market absorbed that $1 billion and still sold off. Hence, some commentators have noted that Cramer's logic is somehow flawed (unless his post is sarcastic). 

"Inverse Cramer"

The reactions of the jaded cryptocurrency community are (unsurprisingly) dominated by the "Inverse Cramer" theory. 

This is a long-standing internet meme/theory arguing that Cramer is so consistently wrong about market predictions that investors should do the exact opposite of what he says to make money.

Many users are celebrating his negativity because, according to the meme, his bearishness signals a market bottom. 

Bitcoin is currently changing hands at $86,411 after collapsing to an intraday low of $85,427. 

The US government has again delayed long-promised crypto rules. The Senate Banking Committee has postponed hearings on the crypto market structure bill until early 2026. This ends hopes that clear federal rules will be in place by 2025.

Committee Chair Tim Scott said the bill needs support from both parties, and lawmakers are not willing to rush it. For crypto companies and investors, the delay means continued confusion about what is allowed and who regulates what.

The crypto market saw a sharp drop on December 15, losing nearly $150 billion in total value. Bitcoin price today fell close to the $85,000 level, while major coins like Ethereum, XRP, and Dogecoin dropped between 4% and 8% in just one day. 

The sudden move left many traders surprised, wondering the key reason behind the fall. 

Chinese Authorities Tightened the Bitcoin Mining Rule

One major reason behind the fall appears to be new action from China. Authorities reportedly tightened rules on Bitcoin mining again, forcing 1.3 GW of capacity mining operations to shut down. 

In Xinjiang alone, around 400,000 miners went offline in a short time. This cut global Bitcoin mining power by about 8%.

When miners lose access to power, their income drops instantly. To cover costs or move operations, some miners sell their Bitcoin holdings, which adds extra supply to the market and pushes prices down in the short term.

ETF Outflows Add to Selling Pressure

At the same time, Bitcoin ETFs saw strong outflows on December 15. Total outflows reached about $357.6 million in a single day. Fidelity led the exits with $230.1 million, followed by Bitwise with $44.3 million and ARK Invest with $34.5 million. 

Notably, no major Bitcoin ETF recorded inflows that day, including BlackRock.

Long Leverage Triggers $655 Million in Liquidations

Eventually, heavy leverage in the market made things worse. In the past 24 hours, nearly 188,247 traders were liquidated, with total losses of around $649.4 million. 

The largest single liquidation was a $11.58 million BTC position on Binance. As prices fell, forced liquidations pushed Bitcoin even lower in a short time.

Altcoins and Crypto Stocks Felt The Pain

Bitcoin’s price drop spread across the entire crypto market, pulling down major altcoins. Ethereum, XRP, Solana, and other large tokens dropped between 5% and 8% over the last 24 hours.

The weakness also hit crypto-related stocks. Shares of Strategy fell more than 9% at one point, while Coinbase slipped nearly 7%.

What Comes Next for Bitcoin?

Despite the crash, institutional buying did not stop. Strategy added 10,645 BTC, worth about $980 million, bringing its total holdings to 671,268 BTC.

From a technical view, Bitcoin’s daily chart shows the price has broken below a symmetrical triangle pattern but is still holding above a key support zone. The Ichimoku Cloud is now acting as resistance around $90,000 to $92,000.