A seemingly strange signal flickers in front of the trader's screen: Bitcoin stabilizes around $87,000, just after the historic interest rate hike by the Bank of Japan. This tranquility is deceptive. In fact, a global liquidity shock triggered by the Tokyo Central Bank is brewing, and the crypto market has become the easiest target to hit.

Time rewinds. The unexpected interest rate hike by the Bank of Japan in August 2025 caused Bitcoin to drop 18% within 24 hours. Risk assets collapsed across the board; it was a sudden black swan event. Fast forward to December 19, the Bank of Japan struck again — the policy interest rate was raised by 25 basis points to 0.75%, a nearly 30-year high. This time it was not a surprise, as the market had long anticipated it.

But this is precisely the deadliest place. The more relaxed the market is, the faster the knife moves.

The key lies in the "channel" of the global financial system - the yen arbitrage trade. For decades, large institutional investors have done a great job: borrowing yen at nearly zero cost, converting it into dollars, and then pouring it into U.S. stocks, crypto assets, and high-yield projects. This game, with a scale of tens of trillions of dollars, has long become the default logic for global asset pricing.

The continuous interest rate hikes by the Bank of Japan are gradually dismantling this system. It's not just that borrowing money is becoming more expensive; the more frightening aspect is that the entire arbitrage chain is starting to loosen. Liquidity is flowing back from high-yield assets, and the crypto market is the first to bear the brunt. Positions built up with leverage will face unimaginable consequences once the wind changes.