This Friday marks one of the four occurrences of the Triple Witching Day in the year, where index futures and options will concentrate on expiration. The market is likely to see an increase in trading volume and heightened volatility, making it difficult for prices to stabilize.

Macro focus is on the Bank of Japan: the interest rate decision will be announced on Thursday. The previous drop has already reflected the expectation of an interest rate hike, during which Bitcoin and the Nikkei Index plummeted simultaneously. The market is worried that yen carry trades may be forced to liquidate, reminiscent of the chain sell-off in July and August 2024.

The long-term low interest rates of the yen make it the cheapest financing currency in the world. A large amount of capital borrows yen to exchange for dollars to buy high-volatility assets such as U.S. stocks and Bitcoin.

However, the premise for arbitrage is the continued weakness of the yen. Once the yen appreciates and borrowing costs rise, leverage will become a burden, forcing funds to sell off risk assets to repay debts.

With two major variables overlapping, the short-term market uncertainty is high, making it prone to back-and-forth fluctuations. It is advisable to strictly control positions and implement good risk management.