《This Friday is "Triple Witching Day" + Yen Policy Shock, This Wave of Volatility is Going to Explode》
This Friday's "Triple Witching Day" happens four times a year, with options and futures expiring together, trading volume is bound to increase, and volatility will definitely not be smooth, with the tolerance level dropping to the lowest.
Looking at the macro: Focus on the Bank of Japan's interest rate decision on Thursday — the recent drop in the cryptocurrency market has actually reflected the expectation of a yen interest rate hike in advance. At that time, not only did Bitcoin fall, but the Nikkei index also collapsed, as the market is worried about one thing: Will yen carry trades be forcibly liquidated, repeating the chain reaction of plunges seen in July and August 2024.
Why the panic? Japan's long-term zero interest rate has made the yen the cheapest "borrowing tool" in the world: Many funds borrow yen to exchange for dollars, to buy U.S. stocks, tech stocks, or even Bitcoin, which is the "yen carry trade." However, the Achilles' heel of this strategy is that the "yen keeps falling" — if the yen starts to rise, borrowing costs will soar, and the previous leverage will become a burden, forcing funds to cut positions and flee. At that time, what is sold is not yen, but risk assets like Bitcoin held in hand.
The next few days will see a double whammy: the technical volatility of Triple Witching Day, combined with the impact of Japanese policy on global risk assets, will lead to heightened short-term uncertainty, making the market prone to wild swings. It is suggested that everyone control their positions first and tighten risk control.
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