The performance of the crypto market in 2025 was lackluster, with Bitcoin experiencing its first annual decline after the halving, and the once-glorious "digital gold" halo fading. In contrast, traditional stock markets and gold saw strong gains. Looking ahead to 2026, the market landscape may undergo a turning point—three core variables: Federal Reserve policy adjustments, the Bank of Japan's rate hike battles, and the US midterm election cycle will reshape the logic of crypto asset trends. Will it be a reversal of the bear market or continued volatility? The answer lies in the interplay between policy and liquidity.

The Federal Reserve is undoubtedly the strongest market driver. Institutions generally expect 2 to 3 rate cuts this year, with a consensus forming around the first cut during the new chairman's meeting in June. The interest rate is expected to fall from the current 3.50%-3.75% range to 3%-3.25%. More importantly, US financial institutions have increased asset purchase scales to $525 billion, plus the official liquidity account has released $100 billion, creating a dual "liquidity injection" mode that will continuously supply funds to the crypto market. Meanwhile, legislation advancing the stablecoin regulatory framework is progressing smoothly, laying a foundation for industry compliance and benefiting long-term ecosystem development.

As for the Bank of Japan's rate hike threat, the market has already priced it in. Forecasting agencies believe the Bank of Japan will raise rates once in July and December, with the final rate possibly reaching 1.25%. But the key point is that a synchronized rate cut by the Federal Reserve will narrow the US-Japan interest rate differential, significantly reducing the appeal of carry trades. Coupled with the global liquidity easing trend offsetting some tightening effects, the historic scenario of a crash triggered by Japan's rate hikes is unlikely to recur. Short-term volatility is more likely to present opportunities for institutional positioning.

US political schedules are also worth noting. To secure seats in Congress during the midterm elections, the ruling party will likely introduce a series of stimulus measures, including room for rate cuts and tariff benefits, making the first half of 2026 a golden window for crypto asset operations. However, as the elections approach in the second half, political uncertainty will increase, regulatory sentiment may shift, and markets will preemptively digest this potential pressure.

Overall, the strategy for 2026 should be: capitalize on liquidity release in the first half with active positioning; in the second half, control positions and reserve room for volatility. Which will have a deeper impact on the market—Federal Reserve's $525 billion bond purchases or the Bank of Japan's rate hikes? Making full use of the first-half window might be the most prudent choice. The answers to these questions will directly influence the performance of returns in 2026.