The Rally That Couldn’t Hold
December started off strong for crypto. Bitcoin shot up close to $94,000 and Ethereum touched $3,250, marking the best three-week stretch since the start of 2024.
Two things got traders excited. Michael Saylor’s company announced they’d bought another $960 million worth of Bitcoin for their treasury, reigniting hopes that more corporations would follow suit. At the same time, Ethereum developers confirmed the Fusaka upgrade would roll out on December 3, which should speed up transactions on Layer-2 networks.
But the excitement didn’t last. What looked like a breakout on Wednesday and Thursday turned into a classic case of “buy the rumor, sell the news.” By Friday, big trading desks in the U.S. started selling, triggering a wave of stop-losses that pushed Bitcoin back below the critical $90,000 level. Laser Digital’s traders called the move typical of what we’re seeing in 2025—quick pops driven by news headlines that fade just as fast once the buying dries up.
Weekend bargain hunters tried to push prices back up but couldn’t get much momentum. By Monday, the rally’s energy was spent, and the market started paying attention to bigger economic forces again.
Bond Markets Send Shockwaves Through Crypto
Right as crypto’s momentum stalled, the broader financial picture got messy. Government bond yields jumped around the world, starting in Japan.
Japan’s 10-year bond yield climbed to 1.90%—the highest it’s been since the mid-1990s. Traders are now betting there’s a real chance the Bank of Japan might raise interest rates on December 19 to keep inflation in check. That matters for everyone, not just Japan. When Japanese rates go up, it affects global borrowing costs and drains money from trades that usually flow into U.S. bonds, tech stocks, and crypto.
In the U.S., the 10-year Treasury note pushed above 4.10% ahead of the Federal Reserve’s December 10 meeting. Most people expect the Fed to cut rates by a tiny 0.25%, but pair it with a warning that rates will stay high through 2026.
Money flow data tells the story. U.S. stock funds lost $3.5 billion last week even though the S&P 500 is still near yearly highs. Global funds pulled in $7.9 billion, but that’s just money moving around, not new cash flooding in. Crypto, which tends to swing harder than anything else, took the biggest hit—the total market value dropped about 6% in two days, wiping out half of December’s early gains.
Traders Gear Up for Central Bank Decisions
Options markets show how nervous people are. Bitcoin’s implied volatility cooled to the mid-40s after last week’s spike, but traders are still paying extra to protect against big moves. Options expiring just after the Fed meeting are pricing in about a 6% swing for Bitcoin and 9% for Ethereum.
Three dates have everyone’s attention: the Fed’s announcement on December 10, U.S. jobs and inflation reports the following week, and the Bank of Japan meeting on December 19.
There’s a clear pattern right now—when crypto prices drop, volatility spikes. That tells you how fragile confidence is while interest rates are resetting higher. The Fusaka upgrade is done, the corporate buying news is old, so crypto is basically just trading on macro headlines now. Most analysts think Bitcoin will bounce between $80,000 and $96,000 until we get clarity on what central banks are doing.
For now, traders are playing it safe, keeping positions small and cash ready on the sidelines. Turns out even digital gold can’t escape the pull of the global bond market.
