The big one is coming! The Bank of Japan may raise interest rates on December 19, which could trigger a crypto crash, and leveraged bubbles are facing liquidation.

For the past few decades, Japan's interest rates have been near zero, making the yen the cheapest borrowing tool in the world. Investment institutions love to engage in arbitrage trading: borrowing yen to invest in high-yield assets, such as cryptocurrencies, by exchanging yen for dollars. However, after the interest rate hike, the cost of borrowing yen will rise, making the business unprofitable. Large institutions will sell high-risk assets to exchange back for yen to repay debts, leading to a collective market sell-off and price drops. Historical data shows that Bitcoin often experiences significant corrections after the Bank of Japan raises interest rates.

This rate hike coincides with the market's weak points: high leverage, where price drops trigger a large number of forced liquidations, creating a vicious cycle; panic emotions and spreading fear can easily lead to irrational sell-offs; the market is still in a tug-of-war between Japan's interest rate hike and the Federal Reserve's interest rate cuts, with short-term selling pressure from Japan's rate hike potentially stronger, while medium- to long-term liquidity direction is determined by the Federal Reserve's rate cuts.

Arbitrage trading refers to investors borrowing low-interest yen to exchange for high-yield currencies to invest in high-risk assets. A rate hike increases the cost of borrowing yen and appreciates the yen, squeezing profits and exchange rate gains, prompting investors to sell assets to exchange back for yen.

$ETH market trend: In the moving average system, the price is above MA7 and close to MA30; observe if MA7 can flatten and tilt upward; the MACD indicator's DIF line is rising, the Bollinger Bands are narrowing, with an upward breakout probability of no less than 50%. Volume has surged to more than twice the average volume, confirming the direction. In multiple time frames, the daily line is in a correction channel, and the previous low of 2718 has not been broken or is being tested for the second time; on the weekly line, pay attention to whether the ETH/BTC exchange rate stabilizes. Risk variables include BTC breaking critical support and the perpetual contract funding rate in the derivatives market being negative. The next 3 - 5 four-hour candlesticks are a key observation period. If the closing price holds above 2900 and the MACD histogram shortens, the probability of an upward breakout exceeds 60%.

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