BiQ: My View on Near-Term Market Volatility 12/15/25

As many investors are aware, this coming Friday, December 19th, is a triple-witching day for the markets, which can often indicate heightened volatility. However, what makes this Friday even more special is that the BoJ plans to increase its lending rate to 0.75% on Friday, and is targeting 1% by the end of next September.

My viewpoint is that the volatility we are seeing may be driven by fears around the impact of the rate hike on the Yen-carry trade, where large investors borrow in Yen and invest in Dollars. As the lending rate for the Yen increases, this puts pressure on investors with Yen exposure, which in turn can spark a sell-off in dollar-denominated equities, putting risk assets at increased risk.

I believe we are already seeing the impact on risk assets today. This can perhaps be most clearly seen in the pullback in BTC prices, which can have a knock-on effect on related equities, as we are witnessing today in data centers and other related stocks.

On our side of the Pacific, the Fed recently cut rates by 0.25% and has indicated it ended QT as of December 1st, and I expect we will see the Fed begin to inject liquidity into the markets, if it hasn't already; however, while I expect this will soften any blow, the effect of this may take time to work its way through the system.

As a precaution, I have opened some short-term hedges in my portfolio, and I may become more aggressive about selling calls; however, my current plan is to weather the storm--if there is one, which is by no means certain.

To be clear, I am not a macro-economist, and I can't predict with any certainty what will happen. I am only sharing my viewpoint, but please follow your own personal trading plan.

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